United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
Certified Shareholder Report
of Registered Management Investment Companies
811-21904
(Investment Company Act File Number)
(Exact Name of Registrant as Specified in Charter)
Federated Hermes Funds
4000 Ericsson
Drive
Warrendale, PA 15086-7561
(Address of Principal Executive Offices)
(412) 288-1900
(Registrant’s Telephone
Number)
Peter J. Germain, Esquire
1001 Liberty
Avenue
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)
(Notices should be sent to the Agent
for Service)
Date of Fiscal Year End: 2026-07-31
Date of Reporting Period:
| Item 1. | Reports to Stockholders |
| Item 2. | Code of Ethics |
(a) As of the end of the period covered by this report, the registrant has adopted a code of ethics (the “Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers”) that applies to the registrant’s Principal Executive Officer and Principal Financial Officer; the registrant’s Principal Financial Officer also serves as the Principal Accounting Officer.
(c) There was no amendment to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(d) There was no waiver granted, either actual or implicit, from a provision to the registrant’s code of ethics described in Item 2(a) above during the period covered by the report.
(e) Not Applicable
(f)(3) The registrant hereby undertakes to provide any person, without charge, upon request, a copy of the code of ethics. To request a copy of the code of ethics, contact the registrant at 1-800-341-7400, and ask for a copy of the Section 406 Standards for Investment Companies - Ethical Standards for Principal Executive and Financial Officers.
| Item 3. | Audit Committee Financial Expert |
The registrant’s Board has determined that each of the following members of the Board’s Audit Committee is an “audit committee financial expert,” and is “independent,” for purposes of this Item 3: John G. Carson, Thomas M. O’Neill and John S. Walsh.
| Item 4. | Principal Accountant Fees and Services |
(a) Audit Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2026 - $178,933
Fiscal year ended 2025 - $172,050
(b) Audit-Related Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2026 - $0
Fiscal year ended 2025 - $0
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(c) Tax Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2026 - $0
Fiscal year ended 2025 - $0
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(d) All Other Fees billed to the registrant for the two most recent fiscal years:
Fiscal year ended 2026 - $0
Fiscal year ended 2025 - $0
Amount requiring approval of the registrant’s Audit Committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, $0 and $0 respectively.
(e)(1) Audit Committee Policies regarding Pre-approval of Services.
The Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditor in order to assure that the provision of such services do not impair the auditor’s independence. The Audit Committee is required to pre-concur with independence conclusions made by the independent auditor regarding non-audit services to be provided by the independent auditor to the Funds, the Funds Board of Directors, or any entity that is controlled directly or indirectly by the Funds. Unless a type of service to be provided by the independent auditor has received general pre-approval, it will require specific pre-approval (and pre-concurrence for non-audit services) by the Audit Committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the Audit Committee.
Certain services have the general pre-approval of the Audit Committee. The term of the general pre-approval is 12 months from the date of pre-approval, unless the Audit Committee specifically provides for a different period. The Audit Committee will annually review the services that may be provided by the independent auditor without obtaining specific pre-approval from the Audit Committee and may grant general pre-approval for such services. The Audit Committee will revise the list of general pre-approved services from time to time, based on subsequent determinations. The Audit Committee will not delegate to management its responsibilities to pre-approve services performed by the independent auditor.
The Audit Committee has delegated pre-approval/pre-concurrence authority to its chairman (the “Chairman”) for services that do not exceed a specified dollar threshold. The Chairman or Chief Audit Executive will report any such pre-approval/pre-concurrence decisions to the Audit Committee at its next scheduled meeting. The Committee will designate another member with such pre-approval/pre-concurrence authority when the Chairman is unavailable.
AUDIT SERVICES
The annual audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. The Audit Committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, registered investment company (RIC) structure or other matters.
In addition to the annual audit services engagement specifically approved by the Audit Committee, the Audit Committee may grant general pre-approval for other audit services, which are those services that only the independent auditor reasonably can provide. The Audit Committee has pre-approved certain audit services; with limited exception, all other audit services must be specifically pre-approved by the Audit Committee.
AUDIT-RELATED SERVICES
Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the RIC’s financial statements or that are traditionally performed by the independent auditor. The Audit Committee believes that the provision of audit-related services does not impair the independence of the auditor, and has pre-approved certain audit-related services; all other audit-related services must be specifically pre-approved by the Audit Committee.
TAX SERVICES
The Audit Committee believes that the independent auditor can provide tax services to the RIC such as tax compliance, tax planning and tax advice without impairing the auditor’s independence. However, the Audit Committee will not permit the retention of the independent auditor in connection with a transaction initially recommended by the independent auditor, the purpose of which may be tax avoidance and the tax treatment of which may not be supported in the Internal Revenue Code and related regulations. The Audit Committee has pre-approved/pre-concurred certain tax services; with limited exception, all tax services involving large and complex transactions must be specifically pre-approved/pre-concurred by the Audit Committee.
ALL OTHER SERVICES
With respect to the provision of permissible services other than audit, review or attest services the pre-approval/pre-concurrence requirement is waived if:
(1) With respect to such services rendered to the Funds, the aggregate amount of all such services provided constitutes no more than five percent of the total amount of revenues paid by the audit client to its accountant during the fiscal year in which the services are provided; and,
(2) With respect to such services rendered to the Fund’s investment adviser ( the “Adviser”)and any entity controlling, controlled by to under common control with the Adviser such as affiliated non-U.S. and U.S. funds not under the Audit Committee’s purview and which do not fall within a category of service which has been determined by the Audit Committee not to have a direct impact on the operations or financial reporting of the RIC, the aggregate amount of all services provided constitutes no more than five percent of the total amount of revenues paid to the RIC’s auditor by the RIC, its Adviser and any entity controlling, controlled by, or under common control with the Adviser during the fiscal year in which the services are provided; and
(3) Such services were not recognized by the issuer or RIC at the time of the engagement to be non-audit services; and
(4) Such services are promptly brought to the attention of the Audit Committee and approved prior to the completion of the audit by the Audit Committee or by one or more members of the Audit Committee who are members of the Board of Directors to whom authority to grant such approvals has been delegated by the Audit Committee.
The Audit Committee may grant general pre-approval/pre-concurrence to those permissible non-audit services which qualify for pre-approval and which it believes are routine and recurring services, and would not impair the independence of the auditor.
The Securities and Exchange Commission’s (the “SEC”) rules and relevant guidance should be consulted to determine the precise definitions of these services and applicability of exceptions to certain of the prohibitions.
PRE-APPROVAL FEE LEVELS
Pre-approval fee levels for all services to be provided by the independent auditor will be established annually by the Audit Committee. Any proposed services exceeding these levels will require specific pre-approval by the Audit Committee.
PROCEDURES
Requests or applications to provide services that require specific approval/concurrence by the Audit Committee will be submitted to the Audit Committee by the Fund’s Principal Accounting Officer and/or the Chief Audit Executive of Federated Hermes, Inc., only after those individuals have determined that the request or application is consistent with the SEC’s rules on auditor independence.
(e)(2) Percentage of services identified in items 4(b) through 4(d) that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X:
4(b)
Fiscal year ended 2026 – 0%
Fiscal year ended 2025 - 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(c)
Fiscal year ended 2026 – 0%
Fiscal year ended 2025 – 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
4(d)
Fiscal year ended 2026 – 0%
Fiscal year ended 2025 – 0%
Percentage of services provided to the registrant’s Adviser and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were approved by the registrant’s Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X, 0% and 0% respectively.
(f) NA
(g) Non-Audit Fees billed to the registrant, the registrant’s Adviser, and certain entities controlling, controlled by or under common control with the Adviser:
Fiscal year ended 2026 - $187,904
Fiscal year ended 2025 - $169,531
(h) The registrant’s Audit Committee has considered that the provision of non-audit services that were rendered to the registrant’s Adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
(i) Not Applicable
(j) Not Applicable
| Item 5. | Audit Committee of Listed Registrants |
Not Applicable
| Item 6. | Schedule of Investments |
(a) The registrant’s Schedule of Investments is included as part of the Financial Statements filed under Item 7 of this form.
(b) Not Applicable
| Item 7. | Financial Statements and Financial Highlights for Open-End Management Companies |
Annual Financial Statements
and Additional Information
and Additional Information
July 31, 2026
|
Share
Class | Ticker
|
A | QAACX
|
C | QCACX
|
Institutional | QIACX
|
R6 | QKACX
|
Federated Hermes MDT All Cap Core Fund
A Portfolio of Federated Hermes MDT Series
Not FDIC Insured ▪ May
Lose Value ▪ No Bank Guarantee
CONTENTS
Portfolio
of Investments
July 31, 2026
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—97.9% |
|
|
|
|
Communication
Services—8.9% |
|
|
621,028
|
|
Alphabet,
Inc., Class A |
$ 221,166,702
|
|
151,257
|
1
|
CarGurus,
Inc. |
5,481,554
|
|
187,333
|
1
|
Charter
Communications, Inc. |
27,159,538
|
|
57,601
|
|
Meta
Platforms, Inc. |
32,067,053
|
|
577,854
|
1
|
Netflix,
Inc. |
41,437,910
|
|
243,744
|
1
|
Pinterest,
Inc. |
5,852,293
|
|
537,286
|
1
|
Trade
Desk, Inc./The |
9,692,639
|
|
104,253
|
|
Verizon
Communications, Inc. |
4,880,083
|
|
|
|
TOTAL
|
347,737,772
|
|
|
|
Consumer
Discretionary—10.4% |
|
|
580,702
|
|
Advance
Auto Parts, Inc. |
32,252,189
|
|
435,167
|
1
|
Amazon.com,
Inc. |
118,182,654
|
|
96,826
|
1
|
Capri
Holdings Ltd. |
1,542,438
|
|
42,529
|
1
|
Chipotle
Mexican Grill, Inc. |
1,582,929
|
|
129,399
|
1
|
Deckers
Outdoor Corp. |
12,536,175
|
|
16,698
|
1
|
Duolingo,
Inc. |
2,251,057
|
|
43,299
|
|
Expedia
Group, Inc. |
12,761,947
|
|
116,820
|
1
|
Five
Below, Inc. |
25,365,127
|
|
269,817
|
|
General
Motors Co. |
23,975,939
|
|
69,650
|
1
|
Life
Time Group Holdings, Inc. |
3,141,215
|
|
266,835
|
1
|
Lululemon
Athletica, Inc. |
31,718,677
|
|
64,318
|
1
|
SharkNinja,
Inc. |
10,404,723
|
|
104,554
|
1
|
Tesla,
Inc. |
32,538,250
|
|
96,530
|
|
TJX
Cos., Inc. |
15,188,030
|
|
15,179
|
1
|
Ulta
Beauty, Inc. |
7,784,247
|
|
703,981
|
1
|
Viking
Holdings Ltd. |
73,460,417
|
|
19,349
|
|
Yum!
Brands, Inc. |
2,965,815
|
|
|
|
TOTAL
|
407,651,829
|
|
|
|
Consumer
Staples—3.5% |
|
|
61,565
|
|
Costco
Wholesale Corp. |
58,603,108
|
|
55,924
|
|
Kimberly-Clark
Corp. |
6,113,052
|
|
35,270
|
|
Kroger
Co. |
2,036,490
|
|
266,853
|
1
|
Maplebear,
Inc. |
11,901,644
|
|
39,471
|
|
PepsiCo,
Inc. |
5,508,573
|
|
38,374
|
|
Philip
Morris International, Inc. |
7,322,527
|
|
16,770
|
|
Target
Corp. |
2,423,097
|
|
386,252
|
|
WalMart,
Inc. |
42,951,222
|
|
|
|
TOTAL
|
136,859,713
|
|
|
|
Energy—2.5%
|
|
|
125,968
|
|
EOG
Resources, Inc. |
18,730,182
|
|
64,135
|
1
|
ExxonMobil
Holdings Corp. |
9,969,144
|
|
56,812
|
|
Marathon
Petroleum Corp. |
17,979,294
|
|
201,422
|
|
Occidental
Petroleum Corp. |
11,495,154
|
|
183,244
|
|
PBF
Energy, Inc. |
13,244,876
|
|
49,497
|
|
Phillips
66 |
10,477,525
|
|
96,869
|
|
Weatherford
International PLC |
8,504,130
|
|
120,608
|
|
Williams
Cos., Inc. |
8,628,296
|
|
|
|
TOTAL
|
99,028,601
|
|
|
|
Financials—13.7%
|
|
|
43,810
|
|
Ameriprise
Financial, Inc. |
23,913,250
|
Annual
Financial Statements and Additional Information
1
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Financials—continued
|
|
|
44,385
|
1
|
Arch
Capital Group Ltd. |
$ 4,462,024
|
|
151,875
|
|
Bank
of America Corp. |
9,408,656
|
|
342,219
|
|
Bank
of New York Mellon Corp. |
53,499,096
|
|
9,886
|
|
Cboe
Global Markets, Inc. |
3,066,934
|
|
229,087
|
|
Charles
Schwab Corp. |
24,109,116
|
|
53,415
|
|
Citigroup,
Inc. |
7,074,817
|
|
1,564,215
|
1
|
Fiserv,
Inc. |
84,373,757
|
|
21,433
|
|
Globe
Life, Inc. |
3,906,164
|
|
17,805
|
|
Goldman
Sachs Group, Inc. |
18,132,256
|
|
171,228
|
|
Interactive
Brokers Group, Inc., Class A |
15,066,352
|
|
179,243
|
|
Jackson
Financial, Inc. |
21,917,834
|
|
91,069
|
|
JPMorgan
Chase & Co. |
32,037,164
|
|
108,494
|
|
Morgan
Stanley |
22,829,307
|
|
139,168
|
|
Northern
Trust Corp. |
25,355,018
|
|
272,233
|
1
|
Oscar
Health, Inc. |
8,499,114
|
|
103,970
|
|
PayPal
Holdings, Inc. |
5,948,124
|
|
174,013
|
|
Prudential
Financial, Inc. |
21,243,507
|
|
290,495
|
|
State
Street Corp. |
53,497,559
|
|
188,507
|
|
Synchrony
Financial |
14,286,946
|
|
40,491
|
|
The
Hartford Insurance Group, Inc. |
5,746,078
|
|
204,378
|
|
The
Travelers Cos., Inc. |
76,510,948
|
|
53,547
|
|
Virtu
Financial, Inc. |
3,144,815
|
|
|
|
TOTAL
|
538,028,836
|
|
|
|
Health
Care—10.4% |
|
|
306,398
|
|
AbbVie,
Inc. |
76,887,513
|
|
61,462
|
1
|
Align
Technology, Inc. |
10,396,912
|
|
8,984
|
1
|
Alnylam
Pharmaceuticals, Inc. |
1,846,392
|
|
99,785
|
|
Amgen,
Inc. |
38,433,191
|
|
11,376
|
1
|
Biogen,
Inc. |
2,308,759
|
|
74,072
|
1
|
Bridgebio
Pharma, Inc. |
5,932,426
|
|
48,857
|
|
Cardinal
Health, Inc. |
11,238,576
|
|
26,210
|
|
Cencora,
Inc. |
8,160,221
|
|
27,531
|
1
|
Charles
River Laboratories International, Inc. |
6,401,233
|
|
214,602
|
1
|
Elanco
Animal Health, Inc. |
5,659,055
|
|
28,818
|
|
Eli
Lilly & Co. |
33,107,271
|
|
167,740
|
|
Gilead
Sciences, Inc. |
21,841,425
|
|
31,027
|
1
|
Halozyme
Therapeutics, Inc. |
2,560,969
|
|
14,787
|
|
Humana,
Inc. |
5,380,398
|
|
110,139
|
1
|
Illumina,
Inc. |
22,589,509
|
|
44,666
|
1
|
Incyte
Corp. |
5,338,480
|
|
26,297
|
1
|
Indivior
Pharmaceuticals, Inc. |
1,052,143
|
|
7,353
|
1
|
Insulet
Corp. |
1,215,818
|
|
37,676
|
1
|
Intuitive
Surgical, Inc. |
13,312,061
|
|
160,182
|
|
Johnson
& Johnson |
41,062,656
|
|
14,808
|
1
|
Liquidia
Corp. |
1,245,501
|
|
214,172
|
1
|
Moderna,
Inc. |
11,740,909
|
|
38,984
|
|
Regeneron
Pharmaceuticals, Inc. |
29,730,368
|
|
54,657
|
|
UnitedHealth
Group, Inc. |
22,649,861
|
|
96,141
|
1
|
Veeva
Systems, Inc. |
19,591,613
|
|
11,489
|
1
|
Vertex
Pharmaceuticals, Inc. |
5,481,402
|
|
|
|
TOTAL
|
405,164,662
|
|
|
|
Industrials—10.3%
|
|
|
7,345
|
|
3M
Co. |
1,294,777
|
|
54,934
|
|
Allegion
PLC |
8,646,612
|
Annual
Financial Statements and Additional Information
2
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Industrials—continued
|
|
|
74,193
|
|
Allison
Transmission Holdings, Inc. |
$ 8,498,066
|
|
80,633
|
|
Atmus
Filtration Technologies, Inc. |
4,163,082
|
|
8,917
|
|
Automatic
Data Processing, Inc. |
2,376,024
|
|
8,374
|
1
|
Bloom
Energy Corp. |
1,723,453
|
|
14,632
|
|
Caterpillar,
Inc. |
11,922,300
|
|
711,778
|
1
|
Copart,
Inc. |
20,726,975
|
|
54,184
|
|
Emerson
Electric Co. |
8,117,847
|
|
209,835
|
|
GE
Aerospace |
75,555,288
|
|
72,638
|
|
GE
Vernova, Inc. |
71,932,685
|
|
12,416
|
|
General
Dynamics Corp. |
4,760,543
|
|
138,617
|
|
Johnson
Controls International PLC |
20,329,569
|
|
5,658
|
|
Lennox
International, Inc. |
2,353,049
|
|
23,012
|
|
Lockheed
Martin Corp. |
13,410,013
|
|
48,943
|
|
Masco
Corp. |
3,498,446
|
|
10,033
|
|
Northrop
Grumman Corp. |
5,442,702
|
|
23,437
|
|
nVent
Electric PLC |
3,605,314
|
|
42,501
|
|
Paycom
Software, Inc. |
6,968,464
|
|
12,918
|
|
Primoris
Services Corp. |
1,090,408
|
|
22,245
|
|
Rockwell
Automation, Inc. |
10,679,379
|
|
177,605
|
|
RTX
Corp. |
38,224,148
|
|
19,811
|
1
|
SkyWest,
Inc. |
2,119,183
|
|
232,968
|
|
Southwest
Airlines Co. |
10,476,571
|
|
9,872
|
1
|
SPX
Technologies, Inc. |
2,168,089
|
|
24,691
|
|
Trane
Technologies PLC |
11,233,170
|
|
118,185
|
1
|
Uber
Technologies, Inc. |
8,315,497
|
|
98,820
|
1
|
United
Airlines Holdings, Inc. |
11,989,830
|
|
258,569
|
|
Veralto
Corp. |
24,349,443
|
|
28,794
|
|
Vertiv
Holdings Co. |
6,955,766
|
|
|
|
TOTAL
|
402,926,693
|
|
|
|
Information
Technology—32.3% |
|
|
69,836
|
1
|
Adobe,
Inc. |
17,487,633
|
|
47,838
|
1
|
Advanced
Micro Devices, Inc. |
22,778,064
|
|
813,606
|
|
Apple,
Inc. |
251,331,029
|
|
49,519
|
|
Applied
Materials, Inc. |
25,139,311
|
|
175,088
|
1
|
Arista
Networks, Inc. |
31,577,121
|
|
87,426
|
1
|
Atlassian
Corp. PLC |
8,831,337
|
|
206,329
|
|
Broadcom,
Inc. |
80,319,753
|
|
23,077
|
1
|
Cirrus
Logic, Inc. |
2,985,010
|
|
190,091
|
|
Cisco
Systems, Inc. |
22,048,655
|
|
166,305
|
1
|
Crowdstrike
Holdings, Inc. |
31,740,972
|
|
154,952
|
1
|
Enphase
Energy, Inc. |
5,816,898
|
|
18,911
|
1
|
EPAM
Systems, Inc. |
1,996,245
|
|
245,635
|
1
|
Fortinet,
Inc. |
39,780,588
|
|
112,030
|
1
|
Gartner,
Inc., Class A |
16,918,771
|
|
130,046
|
1
|
GoDaddy,
Inc. |
10,760,006
|
|
319,139
|
1
|
Intel
Corp. |
28,786,338
|
|
151,324
|
|
Intuit,
Inc. |
47,828,977
|
|
18,681
|
|
KLA
Corp. |
3,415,260
|
|
61,726
|
|
Lam
Research Corp. |
18,086,953
|
|
14,897
|
1
|
Lumentum
Holdings, Inc. |
10,635,564
|
|
66,972
|
|
Micron
Technology, Inc. |
55,119,965
|
|
287,717
|
|
Microsoft
Corp. |
133,707,844
|
|
80,404
|
|
NetApp,
Inc. |
14,352,114
|
|
1,285,329
|
|
NVIDIA
Corp. |
258,029,797
|
Annual
Financial Statements and Additional Information
3
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Information
Technology—continued |
|
|
19,178
|
1
|
Onto
Innovation, Inc. |
$ 4,959,047
|
|
73,496
|
|
Pegasystems,
Inc. |
2,245,303
|
|
61,085
|
1
|
Qnity
Electronics, Inc. |
8,013,130
|
|
13,019
|
|
Qualcomm,
Inc. |
1,921,735
|
|
13,486
|
1
|
Sandisk
Corp. |
16,383,197
|
|
189,577
|
|
Skyworks
Solutions, Inc. |
11,806,856
|
|
22,435
|
|
TD
SYNNEX Corp. |
5,736,630
|
|
60,509
|
|
Teradyne,
Inc. |
22,248,554
|
|
164,191
|
|
Texas
Instruments, Inc. |
45,274,026
|
|
14,681
|
1
|
Tyler
Technologies, Inc. |
4,545,238
|
|
11,659
|
1
|
Workday,
Inc. |
1,869,404
|
|
|
|
TOTAL
|
1,264,477,325
|
|
|
|
Materials—2.2%
|
|
|
96,211
|
|
Albemarle
Corp. |
11,318,262
|
|
389,639
|
|
Alcoa
Corp. |
17,635,061
|
|
430,675
|
|
Celanese
Corp. |
19,259,786
|
|
57,329
|
|
Mosaic
Co./The |
1,268,117
|
|
399,098
|
|
Newmont
Corp. |
37,399,474
|
|
|
|
TOTAL
|
86,880,700
|
|
|
|
Real
Estate—2.1% |
|
|
695,992
|
|
American
Healthcare REIT, Inc. |
38,697,155
|
|
504,519
|
1
|
CoStar
Group, Inc. |
14,509,966
|
|
241,660
|
|
Kilroy
Realty Corp. |
9,381,241
|
|
44,234
|
|
SL
Green Realty Corp. |
2,341,306
|
|
64,535
|
|
Ventas,
Inc. |
6,034,668
|
|
41,984
|
|
Welltower,
Inc. |
9,842,729
|
|
24,969
|
1
|
Zillow
Group, Inc. |
866,175
|
|
|
|
TOTAL
|
81,673,240
|
|
|
|
Utilities—1.6%
|
|
|
14,632
|
|
American
Electric Power Co., Inc. |
1,870,701
|
|
206,186
|
|
Duke
Energy Corp. |
25,861,910
|
|
113,446
|
|
Edison
International |
8,323,533
|
|
497,056
|
|
Exelon
Corp. |
22,775,106
|
|
41,976
|
|
Southern
Co. |
3,968,411
|
|
|
|
TOTAL
|
62,799,661
|
|
|
|
TOTAL
COMMON STOCKS
(IDENTIFIED
COST $3,033,644,514) |
3,833,229,032
|
|
|
|
INVESTMENT
COMPANY—1.9% |
|
|
72,908,517
|
|
Federated
Hermes Government Obligations Fund, Premier Shares, 3.57%2
(IDENTIFIED
COST $72,908,517) |
72,908,517
|
|
|
|
TOTAL
INVESTMENT IN SECURITIES—99.8%
(IDENTIFIED
COST $3,106,553,031)3
|
3,906,137,549
|
|
|
|
OTHER
ASSETS AND LIABILITIES - NET—0.2%4
|
8,538,788
|
|
|
|
NET
ASSETS—100% |
$3,914,676,337
|
An affiliated company is a company in which
the Fund, alone or in combination with other Federated Hermes funds, has ownership of at least
5% of the voting shares. Transactions with the affiliated companies during the period ended July 31, 2026, were as follows:
|
Affiliated
|
Value
as of
7/31/2025
|
Purchases
at
Cost |
Proceeds
from
Sales |
Change
in
Unrealized
Appreciation/
(Depreciation)
|
Net
Realized
Gain/
(Loss)
|
Value
as of
7/31/2026
|
Shares
Held
as of
7/31/2026
|
Dividend
Income
|
|
Consumer
Discretionary: |
|
|
|
|
|
|
|
|
|
Advance
Auto Parts, Inc. |
$30,817,855
|
$—
|
$—
|
$1,434,334
|
$—
|
$32,252,189
|
580,702
|
$580,702
|
Annual
Financial Statements and Additional Information
4
Transactions with affiliated
investment companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period
ended July 31, 2026, were as follows:
|
|
Federated
Hermes
Government
Obligations
Fund,
Premier
Shares* |
|
Value
as of 7/31/2025 |
$54,556,734
|
|
Purchases
at Cost |
$968,099,609
|
|
Proceeds
from Sales |
$(949,747,826)
|
|
Change
in Unrealized Appreciation/Depreciation |
$—
|
|
Net
Realized Gain/(Loss) |
$—
|
|
Value
as of 7/31/2026 |
$72,908,517
|
|
Shares
Held as of 7/31/2026 |
72,908,517
|
|
Dividend
Income |
$2,640,587
|
|
*
|
All
or a portion of the balance/activity for the fund relates to cash collateral received on securities lending transactions.
|
|
1
|
Non-income-producing
security. |
|
2
|
7-day
net yield. |
|
3
|
The
cost of investments for federal tax purposes amounts to $3,132,568,286. |
|
4
|
Assets,
other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Note: The categories of investments are
shown as a percentage of net assets at July 31, 2026.
Various inputs are used in determining the
value of the Fund’s investments. These inputs are summarized in the three broad levels listed
below:
Level 1—quoted prices in active markets
for identical securities.
Level 2—other significant observable
inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs
(including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing
securities are not an indication of the risk associated with investing in those securities.
As of July 31, 2026, all investments of
the Fund utilized Level 1 inputs in valuing the Fund’s assets carried at fair value.
|
The
following acronym(s) are used throughout this portfolio: |
| |
|
REIT
|
—Real
Estate Investment Trust | |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
5
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$50.61
|
$44.27
|
$35.46
|
$34.32
|
$42.75
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.01
|
0.11
|
0.13
|
0.19
|
0.08
|
|
Net
realized and unrealized gain (loss) |
8.12
|
10.07
|
9.12
|
4.26
|
(1.60)
|
|
Total
From Investment Operations |
8.13
|
10.18
|
9.25
|
4.45
|
(1.52)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.00)2
|
(0.09)
|
(0.16)
|
(0.12)
|
(0.04)
|
|
Distributions
from net realized gain |
(2.29)
|
(3.75)
|
(0.28)
|
(3.19)
|
(6.87)
|
|
Total
Distributions |
(2.29)
|
(3.84)
|
(0.44)
|
(3.31)
|
(6.91)
|
|
Net
Asset Value, End of Period |
$56.45
|
$50.61
|
$44.27
|
$35.46
|
$34.32
|
|
Total
Return3
|
16.53%
|
23.75%
|
26.34%
|
14.35%
|
(4.95)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses4
|
1.05%
|
1.04%
|
1.04%
|
1.04%
|
1.04%
|
|
Net
investment income |
0.03%
|
0.24%
|
0.35%
|
0.57%
|
0.22%
|
|
Expense
waiver/reimbursement5
|
0.10%
|
0.12%
|
0.14%
|
0.16%
|
0.16%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$324,595
|
$262,572
|
$196,787
|
$138,388
|
$105,590
|
|
Portfolio
turnover6
|
71%
|
62%
|
71%
|
130%
|
133%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Represents
less than $0.01. |
|
3
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
4
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
5
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
6
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$44.24
|
$39.32
|
$31.63
|
$31.06
|
$39.55
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.34)
|
(0.22)
|
(0.14)
|
(0.06)
|
(0.19)
|
|
Net
realized and unrealized gain (loss) |
7.03
|
8.89
|
8.11
|
3.82
|
(1.43)
|
|
Total
From Investment Operations |
6.69
|
8.67
|
7.97
|
3.76
|
(1.62)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(2.29)
|
(3.75)
|
(0.28)
|
(3.19)
|
(6.87)
|
|
Net
Asset Value, End of Period |
$48.64
|
$44.24
|
$39.32
|
$31.63
|
$31.06
|
|
Total
Return2
|
15.63%
|
22.83%
|
25.38%
|
13.50%
|
(5.67)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.81%
|
1.80%
|
1.81%
|
1.81%
|
1.81%
|
|
Net
investment income (loss) |
(0.74)%
|
(0.53)%
|
(0.42)%
|
(0.20)%
|
(0.55)%
|
|
Expense
waiver/reimbursement4
|
0.08%
|
0.11%
|
0.12%
|
0.14%
|
0.14%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$148,930
|
$94,358
|
$52,240
|
$35,028
|
$33,256
|
|
Portfolio
turnover5
|
71%
|
62%
|
71%
|
130%
|
133%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
7
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$51.83
|
$45.23
|
$36.20
|
$34.96
|
$43.40
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.17
|
0.25
|
0.25
|
0.29
|
0.20
|
|
Net
realized and unrealized gain (loss) |
8.32
|
10.32
|
9.32
|
4.35
|
(1.63)
|
|
Total
From Investment Operations |
8.49
|
10.57
|
9.57
|
4.64
|
(1.43)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.14)
|
(0.22)
|
(0.26)
|
(0.21)
|
(0.14)
|
|
Distributions
from net realized gain |
(2.29)
|
(3.75)
|
(0.28)
|
(3.19)
|
(6.87)
|
|
Total
Distributions |
(2.43)
|
(3.97)
|
(0.54)
|
(3.40)
|
(7.01)
|
|
Net
Asset Value, End of Period |
$57.89
|
$51.83
|
$45.23
|
$36.20
|
$34.96
|
|
Total
Return2
|
16.87%
|
24.14%
|
26.73%
|
14.69%
|
(4.67)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.75%
|
0.74%
|
0.74%
|
0.74%
|
0.74%
|
|
Net
investment income |
0.32%
|
0.52%
|
0.64%
|
0.86%
|
0.52%
|
|
Expense
waiver/reimbursement4
|
0.15%
|
0.17%
|
0.18%
|
0.21%
|
0.20%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$2,849,517
|
$1,803,567
|
$750,516
|
$413,248
|
$291,517
|
|
Portfolio
turnover5
|
71%
|
62%
|
71%
|
130%
|
133%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
8
Financial
Highlights–Class
R6 Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$50.39
|
$44.07
|
$35.29
|
$34.16
|
$42.56
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.17
|
0.24
|
0.25
|
0.28
|
0.20
|
|
Net
realized and unrealized gain (loss) |
8.08
|
10.05
|
9.07
|
4.26
|
(1.59)
|
|
Total
From Investment Operations |
8.25
|
10.29
|
9.32
|
4.54
|
(1.39)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.14)
|
(0.22)
|
(0.26)
|
(0.22)
|
(0.14)
|
|
Distributions
from net realized gain |
(2.29)
|
(3.75)
|
(0.28)
|
(3.19)
|
(6.87)
|
|
Total
Distributions |
(2.43)
|
(3.97)
|
(0.54)
|
(3.41)
|
(7.01)
|
|
Net
Asset Value, End of Period |
$56.21
|
$50.39
|
$44.07
|
$35.29
|
$34.16
|
|
Total
Return2
|
16.89%
|
24.15%
|
26.72%
|
14.73%
|
(4.66)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.74%
|
0.73%
|
0.73%
|
0.73%
|
0.73%
|
|
Net
investment income |
0.32%
|
0.52%
|
0.65%
|
0.84%
|
0.53%
|
|
Expense
waiver/reimbursement4
|
0.08%
|
0.11%
|
0.12%
|
0.14%
|
0.13%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$591,635
|
$209,736
|
$66,730
|
$40,680
|
$16,717
|
|
Portfolio
turnover5
|
71%
|
62%
|
71%
|
130%
|
133%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
9
Statement
of Assets and Liabilities
July 31, 2026
|
Assets:
|
|
|
Investment
in securities, at value including $105,160,706 of investments in affiliated holdings* (identified
cost $3,106,553,031, including
$93,882,138
of identified cost in affiliated holdings) |
$3,906,137,549
|
|
Income
receivable |
1,864,948
|
|
Income
receivable from affiliated holdings |
252,696
|
|
Receivable
for investments sold |
27,798,073
|
|
Receivable
for shares sold |
3,922,941
|
|
Total
Assets |
3,939,976,207
|
|
Liabilities:
|
|
|
Payable
for investments purchased |
21,972,940
|
|
Payable
for shares redeemed |
2,339,963
|
|
Payable
for investment adviser fee (Note 5)
|
65,234
|
|
Payable
for administrative fee (Note 5)
|
8,239
|
|
Payable
for Directors’/Trustees’ fees (Note 5)
|
2,961
|
|
Payable
for distribution services fee (Note 5)
|
93,333
|
|
Payable
for other service fees (Notes 2 and 5)
|
179,013
|
|
Accrued
expenses (Note 5)
|
638,187
|
|
Total
Liabilities |
25,299,870
|
|
Net
assets for 68,560,403 shares outstanding |
$3,914,676,337
|
|
Net Assets
Consist of: |
|
|
Paid-in
capital |
$3,015,372,016
|
|
Total
distributable earnings (loss) |
899,304,321
|
|
Net
Assets |
$3,914,676,337
|
|
Net Asset
Value, Offering Price and Redemption Proceeds Per Share: |
|
|
Class A
Shares: |
|
|
Net
asset value per share ($324,594,606 ÷ 5,750,446 shares outstanding), no par value, unlimited shares authorized |
$56.45
|
|
Offering
price per share (100/94.50 of $56.45) |
$59.74
|
|
Redemption
proceeds per share |
$56.45
|
|
Class C
Shares: |
|
|
Net
asset value per share ($148,930,000 ÷ 3,061,868 shares outstanding), no par value, unlimited shares authorized |
$48.64
|
|
Offering
price per share |
$48.64
|
|
Redemption
proceeds per share (99.00/100 of $48.64) |
$48.15
|
|
Institutional
Shares: |
|
|
Net
asset value per share ($2,849,516,806 ÷ 49,222,574 shares outstanding), no par value, unlimited shares authorized |
$57.89
|
|
Offering
price per share |
$57.89
|
|
Redemption
proceeds per share |
$57.89
|
|
Class R6
Shares: |
|
|
Net
asset value per share ($591,634,925 ÷ 10,525,515 shares outstanding), no par value, unlimited shares authorized |
$56.21
|
|
Offering
price per share |
$56.21
|
|
Redemption
proceeds per share |
$56.21
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
10
Statement
of Operations
Year Ended July 31,
2026
|
Investment
Income: |
|
|
Dividends
(including $3,209,779 received from affiliated holdings* and net of foreign taxes withheld of $1,272) |
$33,396,292
|
|
Net
income on securities loaned (includes $11,510 earned from affiliated holdings related to cash collateral balances*) (Note 2)
|
1,601
|
|
TOTAL
INCOME |
33,397,893
|
|
Expenses:
|
|
|
Investment
adviser fee (Note 5)
|
21,831,461
|
|
Administrative
fee (Note 5)
|
2,411,417
|
|
Custodian
fees |
103,539
|
|
Transfer
agent fees (Note 2) |
2,520,376
|
|
Directors’/Trustees’
fees (Note 5)
|
14,628
|
|
Auditing
fees |
33,996
|
|
Legal
fees |
11,303
|
|
Portfolio
accounting fees |
210,370
|
|
Distribution
services fee (Note 5)
|
916,754
|
|
Other
service fees (Notes 2 and 5)
|
1,037,932
|
|
Share
registration costs |
458,109
|
|
Printing
and postage |
111,659
|
|
Miscellaneous
(Note 5)
|
36,467
|
|
TOTAL
EXPENSES |
29,698,011
|
|
Waiver
and Reimbursements: |
|
|
Waiver/reimbursement
of investment adviser fee (Note 5) |
(2,452,504)
|
|
Reimbursement
of other operating expenses (Notes 2 and 5) |
(1,693,436)
|
|
TOTAL
WAIVER AND REIMBURSEMENTS |
(4,145,940)
|
|
Net
expenses |
25,552,071
|
|
Net
investment income |
7,845,822
|
|
Realized
and Unrealized Gain (Loss) on Investments: |
|
|
Net
realized gain on investments |
147,251,075
|
|
Net
change in unrealized appreciation of investments (including net change in unrealized appreciation of $1,434,334 on investments in
affiliated
holdings*) |
341,903,911
|
|
Net
realized and unrealized gain (loss) on investments |
489,154,986
|
|
Change
in net assets resulting from operations |
$497,000,808
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
11
Statement
of Changes in Net Assets
|
Year
Ended July 31 |
2026
|
2025
|
|
Increase
(Decrease) in Net Assets |
|
|
|
Operations:
|
|
|
|
Net
investment income |
$7,845,822
|
$6,508,657
|
|
Net
realized gain (loss) |
147,251,075
|
109,469,840
|
|
Net
change in unrealized appreciation/depreciation |
341,903,911
|
235,540,712
|
|
CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS |
497,000,808
|
351,519,209
|
|
Distributions
to Shareholders: |
|
|
|
Class
A Shares |
(12,358,714)
|
(17,738,288)
|
|
Class
C Shares |
(5,765,981)
|
(5,528,744)
|
|
Institutional
Shares |
(102,263,582)
|
(77,210,457)
|
|
Class
R6 Shares |
(12,661,344)
|
(6,232,664)
|
|
CHANGE
IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
(133,049,621)
|
(106,710,153)
|
|
Share Transactions:
|
|
|
|
Proceeds
from sale of shares |
2,129,030,757
|
1,365,448,095
|
|
Net
asset value of shares issued to shareholders in payment of distributions declared |
121,550,959
|
93,576,349
|
|
Cost
of shares redeemed |
(1,070,089,931)
|
(399,873,105)
|
|
CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
1,180,491,785
|
1,059,151,339
|
|
Change
in net assets |
1,544,442,972
|
1,303,960,395
|
|
Net Assets:
|
|
|
|
Beginning
of period |
2,370,233,365
|
1,066,272,970
|
|
End
of period |
$3,914,676,337
|
$2,370,233,365
|
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
12
Notes to
Financial Statements
July 31, 2026
1. ORGANIZATION
Federated Hermes MDT Series (the “Trust”)
is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end
management investment company. The Trust consists of five portfolios. The financial statements included herein are only those of
Federated Hermes MDT All Cap Core Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated
and a shareholder’s interest is limited to the portfolio in which shares are
held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares. All shares of the Fund have equal rights
with respect to voting, except on class-specific matters. The investment objective
of the Fund is long-term capital appreciation.
2. SIGNIFICANT
ACCOUNTING POLICIES
The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its financial statements.
These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In
calculating its net asset value (NAV), the Fund generally values investments as follows:
■
Equity
securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official
closing price in their principal exchange or market.
■
Shares
of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share
practical expedient, as applicable.
■
For
securities that are fair valued in accordance with procedures established by and under the general supervision of Federated MDTA LLC
(the “Adviser”), certain factors may be considered, such as: the last traded or purchase price of the security, information
obtained by contacting the issuer or dealers, analysis of the
issuer’s financial statements or other available documents, fundamental analytical data,
the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public
trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors
including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation
or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain
price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth
in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion
of the Adviser’s valuation committee (“Valuation Committee”),
is deemed not representative of the fair value of such security, the Fund uses the
fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund
could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines
its NAV per share, and the actual value obtained could be materially different.
Fair Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Act, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s
valuation designee to perform any fair value determinations for
securities and other assets held by the Fund. The Adviser is subject to the Trustees’
oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the
Adviser’s fair value determinations.
The Adviser, acting through
its Valuation Committee, is responsible for determining the fair value of investments for which market quotations
are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated
companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use
pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The
Valuation Committee employs various methods for reviewing third-party
pricing-service evaluations including periodic reviews of third-party
pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional
back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on
recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee
determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review
the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant
events procedures as part of the Fund’s compliance program
and will review any changes made to the procedures.
Factors considered by
pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon,
maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers
and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an
investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price
between the prices bid and ask for the investment (a “mid”
evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities,
mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income
securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment,
the fair value of the investment is determined in accordance with procedures adopted by the Adviser.
Annual
Financial Statements and Additional Information
13
The
Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines
that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment
would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both
an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying
the resulting change in value. Examples of significant events
that may occur after the close of the principal market on which a security is traded,
or after the time of a price evaluation provided by a pricing service or a dealer, include:
■
With
respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities
index futures contracts;
■
Political
or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are
traded;
■
Announcements
concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s
operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby
the Valuation Committee uses a pricing service to provide factors to update the fair value of
equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the
pricing time of the Fund. For other significant events, the Fund
may seek to obtain more current quotations or price evaluations from alternative
pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the
investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations
made in response to significant events.
Investment Income, Gains and Losses, Expenses and Distributions
Investment
transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an
identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Foreign dividends are recorded on the
ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions
of net investment income and capital gains, if any, are declared and paid at least annually. Non-cash dividends included in dividend
income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment
income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average
daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense
waiver and reimbursements of $4,145,940 is disclosed in this Note 2 and Note 5. Dividends are declared separately for each class.
No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class
expenses.
Transfer Agent Fees
For
the year ended July 31, 2026, transfer agent fees for the Fund were as follows:
|
|
Transfer
Agent
Fees
Incurred |
Transfer
Agent
Fees
Reimbursed |
|
Class
A Shares |
$275,963
|
$(70,074)
|
|
Class
C Shares |
103,381
|
—
|
|
Institutional
Shares |
2,107,576
|
(1,623,362)
|
|
Class
R6 Shares |
33,456
|
—
|
|
TOTAL
|
$2,520,376
|
$(1,693,436)
|
Other Service Fees
The
Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial
intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder
accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service
fees.
For the year ended July 31, 2026, other
service fees for the Fund were as follows:
|
|
Other
Service
Fees
Incurred |
|
Class
A Shares |
$732,347
|
|
Class
C Shares |
305,585
|
|
TOTAL
|
$1,037,932
|
Federal Taxes
It
is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 and to distribute to shareholders
each year substantially all of its income. Accordingly, no provision
for federal income tax is necessary. As of and during the year ended July
31, 2026, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related
to tax liabilities as income tax expense in the Statement of Operations.
As of July 31, 2026, tax years 2023 through 2026 remain subject to
examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of
Massachusetts.
Annual
Financial Statements and Additional Information
14
When-Issued and Delayed-Delivery
Transactions
The
Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased
on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the
contract.
Securities Lending
The
Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the
loans within the program is one year or less. The Fund receives
cash collateral for securities loaned, which generally is invested in an affiliated
money market fund. Collateral is maintained at a minimum level of 100% of the fair value of investments loaned, plus interest, if applicable.
In accordance with the Fund’s securities lending agreement, the fair value of securities on loan is determined each day at the close
of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business
day. Earnings from collateral invested in affiliated holdings as presented parenthetically on the Statement of Operations do not reflect
fees and rebates and are allocated between the borrower of the security, the securities lending agent, as a fee for its services under
the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on
loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are
deemed to be material by the Adviser. There can be no assurance
that the Fund will have sufficient notice of such matters to be able to terminate
the loan in time to vote thereon.
As of July 31, 2026, the Fund had no outstanding
securities on loan.
Restricted Securities
The
Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered
for public sale without first being registered, or being able
to take advantage of an exemption from registration, under the Securities Act of
1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale
without first being registered, the issuer of the restricted security
has agreed to register such securities for resale, at the issuer’s expense, either
upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be
resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria
established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities,
like other securities, are priced in accordance with procedures
established by and under the general supervision of the Adviser.
Other
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from
those estimated. The Fund applies investment company accounting
and reporting guidance.
3. SHARES
OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
A Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
1,165,212
|
$61,203,273
|
1,261,314
|
$58,918,537
|
|
Shares
issued to shareholders in payment of distributions declared |
223,243
|
11,450,126
|
339,789
|
15,844,045
|
|
Shares
redeemed |
(826,214)
|
(43,504,772)
|
(858,193)
|
(39,233,337)
|
|
NET
CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
562,241
|
$29,148,627
|
742,910
|
$35,529,245
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
C Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
1,203,857
|
$54,854,276
|
965,966
|
$39,827,825
|
|
Shares
issued to shareholders in payment of distributions declared |
114,791
|
5,097,876
|
124,934
|
5,116,049
|
|
Shares
redeemed |
(389,874)
|
(17,823,055)
|
(286,445)
|
(11,664,866)
|
|
NET
CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
928,774
|
$42,129,097
|
804,455
|
$33,279,008
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Institutional
Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
29,838,754
|
$1,609,366,614
|
23,293,426
|
$1,108,388,969
|
|
Shares
issued to shareholders in payment of distributions declared |
1,809,524
|
94,999,996
|
1,416,558
|
67,513,142
|
|
Shares
redeemed |
(17,223,809)
|
(940,438,176)
|
(6,503,519)
|
(305,923,100)
|
|
NET
CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
14,424,469
|
$763,928,434
|
18,206,465
|
$869,979,011
|
Annual
Financial Statements and Additional Information
15
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
R6 Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
7,462,148
|
$403,606,594
|
3,456,663
|
$158,312,764
|
|
Shares
issued to shareholders in payment of distributions declared |
196,252
|
10,002,961
|
110,123
|
5,103,113
|
|
Shares
redeemed |
(1,295,127)
|
(68,323,928)
|
(918,564)
|
(43,051,802)
|
|
NET
CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS |
6,363,273
|
$345,285,627
|
2,648,222
|
$120,364,075
|
|
NET
CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS |
22,278,757
|
$1,180,491,785
|
22,402,052
|
$1,059,151,339
|
4. FEDERAL
TAX INFORMATION
The tax character of distributions as reported
on the Statement of Changes in Net Assets for the years ended July 31, 2026 and 2025,
was as follows:
|
|
2026
|
2025
|
|
Ordinary
income |
$6,654,473
|
$5,006,118
|
|
Long-term
capital gains |
$126,395,148
|
$101,704,035
|
|
TOTAL
|
$133,049,621
|
$106,710,153
|
As of July 31, 2026, the components of distributable
earnings on a tax-basis were as follows:
|
Undistributed
ordinary income |
$4,816,570
|
|
Net
unrealized appreciation |
$773,569,263
|
|
Undistributed
long-term capital gains |
$120,918,488
|
|
TOTAL
|
$899,304,321
|
At July 31, 2026, the cost of investments
for federal tax purposes was $3,132,568,286. The net unrealized appreciation of investments for
federal tax purposes was $773,569,263. This consists of unrealized appreciation from investments for those securities having an excess
of value over cost of $859,864,617 and unrealized depreciation from investments for those securities having an excess of cost over
value of $86,295,354. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments
for the deferral of losses on wash sales.
5. INVESTMENT
ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The
advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.70% of the Fund’s average daily net assets.
Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and
when appropriate, to maintain positive or zero net yields. For
the year ended July 31, 2026, the Adviser voluntarily waived $2,402,308 of its
fee and voluntarily reimbursed $1,693,436 of transfer agent fees. The Adviser has agreed to reimburse the Fund for certain investment
adviser fees as a result of transactions in other affiliated investment companies. For the year ended July 31, 2026, the Adviser reimbursed
$50,196.
Administrative Fee
Federated
Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and
services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated
Hermes Funds subject to a fee under the Administrative Services
Agreement. The fee paid to FAS is based on the average daily net assets
of the Investment Complex as specified below:
|
Administrative
Fee |
Average
Daily Net Assets
of
the Investment Complex |
|
0.100%
|
on
assets up to $50 billion |
|
0.075%
|
on
assets over $50 billion |
Subject to the terms described in the Expense
Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, the annualized fee paid to FAS was 0.077% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket
expenses to the Fund.
Annual
Financial Statements and Additional Information
16
Distribution Services Fee
The
Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will compensate Federated Securities Corp. (FSC), the principal
distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares
to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses
at the following percentages of average daily net assets annually,
to compensate FSC:
|
|
Percentage
of Average Daily
Net
Assets of Class |
|
Class
A Shares |
0.05%
|
|
Class
C Shares |
0.75%
|
Subject to the terms described in the Expense
Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, distribution services fees for the Fund were as follows:
|
|
Distribution
Services
Fees
Incurred |
|
Class
C Shares |
$916,754
|
When FSC receives fees, it may pay some
or all of them to financial intermediaries whose customers purchase shares.
For the year ended July
31, 2026, FSC retained $354,603 of fees paid by the Fund. For the year ended July 31, 2026, the Fund’s Class
A Shares did not incur a distribution services fee; however, it may begin to incur this fee upon approval of the Trustees.
Sales Charges
Front-end
sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended
July 31, 2026, FSC retained $76,526 in sales charges from the sale of Class A Shares. For the year ended July 31, 2026, FSC retained
$24,355 of CDSC relating to redemptions of Class C Shares.
Other Service Fees
For
the year ended July 31, 2026, FSSC received $16,415 of the other service fees disclosed in Note 2.
Expense Limitation
The
Adviser and certain of its affiliates (which may include FSSC, FAS and FSC) on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding
interest expense, extraordinary expenses and proxy-related expenses, if any) paid by the Fund’s Class A Shares, Class C Shares,
Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 1.05%, 1.84%, 0.75% and
0.74% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October
1, 2027; or (b) the date of the Fund’s next effective Prospectus.
Prior to October 1, 2025, the Fee Limit for the Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares was 1.04%, 1.83%, 0.74% and 0.73%, respectively. While the Adviser and its affiliates currently do not anticipate
terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or the
Fee Limit increased prior to the Termination Date with the approval of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain
Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate
payment, Independent Directors’/Trustees’ fees and
certain expenses related to conducting meetings of the Directors/Trustees and other
miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related
to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous
Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INVESTMENT
TRANSACTIONS
Purchases and sales of investments, excluding
long-term U.S. government securities and short-term obligations, for the year ended July
31, 2026, were as follows:
|
Purchases
|
$3,214,179,380
|
|
Sales
|
$2,188,708,909
|
7. CONCENTRATION
OF RISK
The Fund may invest a portion of its assets
in securities of companies that are deemed by the Fund’s management to be classified in similar
business sectors. Economic developments may have an effect on the liquidity and volatility of the portfolio securities.
A substantial portion
of the Fund’s portfolio may be comprised of entities in the Information Technology sector. As a result, the Fund may
be more susceptible to any economic, business, political or other developments which generally affect these entities.
Annual
Financial Statements and Additional Information
17
8. LINE
OF CREDIT
The Fund participates with certain other
Federated Hermes Funds, on a several basis, in an up to $400,000,000 unsecured, 364-day, committed,
revolving line of credit (LOC) agreement dated June 16, 2026. The LOC was made available to temporarily finance the repurchase
or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary
or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s
ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied
before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on
any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and
(iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under
the LOC pays its pro rata share of a commitment fee based on the amount of
the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2026, the Fund had no outstanding
loans. During the year ended July 31, 2026, the Fund did not utilize the LOC.
9. INTERFUND
LENDING
Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries
of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility
allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2026, there were no outstanding loans. During
the year ended July 31, 2026, the program was not utilized.
10. OPERATING
SEGMENTS
An operating segment is defined as a component
of a public entity that engages in business activities from which it may recognize revenues
and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM)
to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. A management committee of the Adviser acts as the CODM. The Fund represents a single operating segment, as the
CODM monitors the operating results of the Fund as a whole and the strategic asset allocation is determined based on the investment
objective of the Fund and executed by the Fund’s portfolio management team. The financial information in the form of the Fund’s
portfolio composition, total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations,
subscriptions and redemptions) which is reviewed by the CODM to assess the Fund’s performance in comparison to the Fund’s
benchmarks and to make resource allocation decisions for the Fund’s single segment is consistent with the information presented
in these financial statements. Segment assets are reflected on
the accompanying Statement of Assets and Liabilities as “total assets” and significant
segment expenses are listed on the accompanying Statement of Operations.
11. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties to the Fund). In addition,
in the normal course of business, the Fund provides certain indemnifications under
arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into
by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to
the arrangement, provided the third party’s actions are
not deemed to have breached an agreed-upon standard of care (such as willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund
does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss
to be remote.
12. FEDERAL
TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2026, the amount
of long-term capital gains designated by the Fund was $126,395,148.
Of the ordinary income
distributions made by the Fund during the year ended July 31, 2026, 100% qualify for the dividend received deduction
available to corporate shareholders.
For the fiscal year ended
July 31, 2026, 100% of total ordinary income distributions made by the Fund are qualifying dividends which may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported
in conjunction with the reporting of your distributions on Form 1099-DIV.
13. SUBSEQUENT
EVENT
On August 21, 2026, the Fund approved a
proposed Agreement and Plan of Reorganization (Reorganization) pursuant to which the Fund would
acquire all or substantially all of the assets of the HVIA Equity Fund in complete liquidation and termination of that Fund. This reorganization
is expected to occur in the fourth quarter of 2026.
Annual
Financial Statements and Additional Information
18
Report of
Independent Registered Public Accounting Firm
TO THE SHAREHOLDERS AND THE
BOARD OF TRUSTEES OF FEDERATED HERMES MDT ALL CAP CORE FUND:
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of Federated Hermes MDT All Cap Core Fund (the
“Fund”) (one of the portfolios constituting Federated Hermes MDT Series (the “Trust”)), including the portfolio
of investments, as of July 31, 2026, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period
then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated
Hermes MDT Series) at July 31, 2026, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are
the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2026, by correspondence with the custodian, brokers, and others; when replies
were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor
of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2026
September 23, 2026
Annual
Financial Statements and Additional Information
19
Evaluation
and Approval of Advisory Contract–May
2026
Federated Hermes MDT All Cap
Core Fund (the “Fund”)
At its meetings in May 2026 (the
“May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who
are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the
“Independent Trustees ”), reviewed and unanimously approved the continuation of the investment advisory contract between
the Fund and Federated MDTA LLC (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s
determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering
such information deemed necessary to evaluate the terms of the Contract and to approve the continuation of the
existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized
below.
Information Received
and Review Process
At the request
of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance
of its May Meetings an independent written report regarding data related to the Fund’s management fee (the
“CCO Management Fee Report”). The Board considered the CCO Management Fee Report, along with other information,
in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation
of the Contract.
In addition
to the CCO Management Fee Report, the Board considered information specifically prepared in connection with
the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding
the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the
Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent
legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized
below. The Board also considered such additional matters as the Independent Trustees deemed reasonably necessary
to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the
Board at its meetings throughout the year.
The Board’s
consideration of the Contract included review of materials and information covering the following matters, among
others: (1) a copy of the Contract; (2) the nature, quality and extent of the advisory and other services provided to the
Fund by Federated Hermes; (3) Federated Hermes’ business and operations; (4) the Adviser’s investment philosophy, personnel
and processes; (5) the Fund’s investment objective and strategies; (6) the Fund’s short-term and long-term performance
- in absolute terms (both on a gross basis and net of expenses) and relative to an appropriate group of peer funds
and its benchmark; (7) the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the
Fund - in absolute terms and relative to an appropriate group of peer funds, with due regard for contractual or voluntary
expense limitations (if any); (8) the financial condition of Federated Hermes; (9) the Adviser’s profitability with respect
to managing the Fund; (10) distribution and sales activity for the Fund; and (11) the use and allocation of brokerage
commissions derived from trading the Fund’s portfolio securities (if any).
The Board
also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered
funds in evaluating the Contract. Using these judicial decisions as a guide, the Board considered several factors it
deemed relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund, including: (1) the nature
and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the
fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser
of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the
fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its
shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with
the fund, including research services received from
brokers that execute fund trades and any fees paid to affiliates of the adviser
for services rendered to the fund; (5) comparative fees and expenses, including a comparison of management fees paid
to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees
charged to institutional and other advisory clients of the same adviser for what might be viewed as like services; and (6)
the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their
expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the
adviser’s services and fees. The Board considered that the Securities and Exchange Commission (“SEC”) disclosure requirements
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with
the factors listed above. The Board was guided by these factors in its evaluation of the Contract to the extent it considered
them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors
in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters
relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively,
the “Federated Hermes Funds”).
Annual
Financial Statements and Additional Information
20
In
addition, the Board considered the preferences and expectations of Fund shareholders and the potential disruptions of the
Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate
or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund
based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes
will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there are a range
of investment options available to the Fund’s shareholders in the marketplace, and such shareholders, having had the opportunity
to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the
Fund.
In determining
to approve the continuation of the Contract, the members of the Board reviewed and evaluated information
and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment.
While individual members of the Board may have weighed certain factors differently, the Board’s determination
to approve the continuation of the Contract was based on a comprehensive consideration of all information provided
to the Board throughout the year. The Board recognized that its evaluation process is evolutionary and that the factors
considered and the emphasis placed on relevant factors may change in recognition of changing circumstances in the
registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal
counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive
session with their independent legal counsel and without management present to review the relevant materials and
consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes
also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations
furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as
part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made
on a fund-by-fund basis.
Nature, Extent and
Quality of Services
The Board
considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources
of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the
Contract and the full range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel,
investment philosophy and process, investment research capabilities and resources, trade operations capabilities,
experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities
of the portfolio management team primarily responsible for the day-to-day management of the Fund and evaluated
Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board
considered the trading operations by the Adviser, including the execution of portfolio transactions and the selection of
brokers for those transactions. The Board also considered the Adviser’s ability to deliver competitive investment performance
for the Fund when compared to the Fund’s Performance Peer Group (as defined below).
In addition,
the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to
consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational
enhancements that are designed to benefit the Federated Hermes Funds. The Board considered Federated Hermes’
oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted
the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered
the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests
made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes
is responsible for providing the Federated Hermes Funds’ officers.
The Board
received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The
Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated
Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any
compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated
Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes
in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended,
including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The
Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes
Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and
policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led,
and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard. In addition, the Board noted
Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for
and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service
providers operate.
Annual
Financial Statements and Additional Information
21
The
Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive
array of funds with different investment objectives, policies and strategies. The Board considered the expenses
that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in
sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted
the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to
exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on
these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services
provided by the Adviser to the Fund.
Fund Investment Performance
The Board
considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board
considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered
detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods
that were provided to the Board throughout the year and in connection with the May Meetings. These reports included,
among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared
to one or more relevant categories or groups of peer funds and the Fund’s benchmark, performance attribution information
and commentary on the effect of market conditions. The Board noted that it evaluated investment performance at
meetings throughout the year and received reports from Federated Hermes regarding the performance of certain Federated
Hermes Funds as well as Federated Hermes’ explanations for less favorable performance and any specific actions
Federated Hermes had taken, or had determined to take, to seek to enhance Fund investment performance and the results
of those actions.
The Board
also reviewed comparative information regarding the performance of other registered funds in the category of
peer funds selected by Morningstar, Inc. (“Morningstar”), an independent fund ranking organization (the “Performance
Peer Group”). The Board noted the CCO’s
statement that comparisons to fund peer groups may be helpful, though not conclusive,
in evaluating the performance of the Adviser in managing the Fund. The Board also considered a report comparing
the performance of the Fund solely to other funds with a quantitative focus in the Performance Peer Group.
The Board
also considered comparative performance data from Lipper, Inc. that was included in reports provided to the Board
throughout the year.
The Board
considered that for the one-year, three-year and five-year periods ended December 31, 2025, the Fund’s performance
was above the median of the Performance Peer Group. In addition, the Board was informed by the Adviser that,
for the same periods, the Fund outperformed its benchmark for the one-year, three-year and five-year periods.
Based on
these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities
to manage the Fund.
Fund Expenses
The Board
considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information
that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and
considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each
element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting
fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from
the overall category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board received a description
of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also
reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar
category.
While mindful
that courts have cautioned against giving too much weight to comparative information concerning fees charged
to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board
in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds more
heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The
Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained
by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore,
appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund
competes.
The Board
reviewed the contractual advisory fee rate, net advisory fee rate, and other expenses of the Fund and noted the
position of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory
fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements,
and that the overall expense structure of the Fund remained competitive in the context of other factors
Annual
Financial Statements and Additional Information
22
considered
by the Board. In this regard, the Board considered that, while comparisons to the Fund’s Expense Peer Group are
relevant in judging the reasonableness of advisory fees, the quantitative focus of the management of the Fund makes fee
and expense comparisons to the Expense Peer Group particularly difficult. The Board further considered that, although the
Fund’s advisory fee was above the median of the Expense Peer Group, the funds in the Expense Peer Group varied widely
in terms of the complexity of their management, and the management of the Fund is among the more complex funds
relative to the Expense Peer Group.
The Board
also received and considered information about the nature and extent of services offered and fees charged by Federated
Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including
non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for
which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s statement that non-registered fund clients
are inherently different products due to the following differences, among others: (i) types of targeted investors; (ii)
applicable laws and regulations; (iii) legal structures; (iv) average account sizes; (v) portfolio management techniques made
necessary by different cash flows and different associated costs; (vi) the time spent by portfolio managers and their teams
(among other personnel across various departments, including legal, compliance and risk management) in reviewing securities
pricing; (vii) SEC mandated risk management programs with respect to fund liquidity and use of derivatives; (viii)
questions on regulatory reporting; (ix) a variety of different administrative responsibilities; and (x) degrees of risk associated
with management. The Board also considered information regarding the differences in the nature of the services required
for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as
a sub-adviser to another institution’s registered fund, noting the CCO’s statement that Federated Hermes generally performs
significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes
Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO emphasized
that differences in fees for providing advisory services to other types of clients may not be appropriate when judging
the appropriateness of the Federated Hermes Funds’ advisory fees because of the different services provided.
Based on
these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction
with other matters considered, are reasonable in light of the services provided.
Profitability
The Board
received and considered profitability information furnished by Federated Hermes. Such profitability information
included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund
basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered
the CCO’s statement that, while the cost allocation report applies consistent allocation processes for purposes of
general comparison of funds, the inherent difficulties in arbitrarily allocating costs lack precision and may cause the report
to be unreliable because a single change in an allocation estimate can dramatically alter the resulting estimate of cost
and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered
the CCO’s statement that the allocation methodologies used by Federated Hermes in estimating profitability for purposes
of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies
previously reviewed by an independent consultant. The Board noted that the independent consultant had previously
conducted a review of the allocation methodologies and reported to the Board that, although there is no single best
method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s
statement that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation
to the services provided.
The Board
also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly-held
fund management companies, including information regarding profitability trends over time. The Board recognized
that profitability comparisons among fund management companies are difficult because of the variation in the type
of comparative information that is publicly available, and the profitability of any fund management company is affected
by numerous factors. The Board considered the CCO’s statement that, based on such profitability information, Federated
Hermes’ profit margins did not appear to be excessive and that Federated Hermes appeared financially sound, with
the resources available to fulfill its contractual obligations.
Economies of Scale
The Board
received and considered information about the notion of possible realization of “economies of scale” as a fund
grows larger, the difficulties of isolating and quantifying economies of scale at an individual fund level, and the extent
to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes
has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio
management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity
and information security programs; internal audit and risk management functions; and technology, systems capabilities
and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed
to provide enhanced or expanded services to the Federated Hermes Funds and their shareholders. The Board
Annual
Financial Statements and Additional Information
23
considered
that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole.
In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies
of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes
Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in
the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds
and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future.
The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds
in recent years, which has resulted in benefits being realized by shareholders.
The Board
also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments)
that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered
that Federated Hermes believes that this information is relevant to consider whether Federated Hermes had an incentive
to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating
the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines
on economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring
fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board
considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes
derived from its relationships with the Federated Hermes Funds. The Board considered that Federated Hermes may
derive a benefit to its reputation as an adviser to the Fund, which may help in attracting other clients and investment personnel.
The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory
contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds
under separate service contracts, including for serving as the Federated Hermes Funds’ administrator and distributor.
In this regard, the Board considered that Federated Hermes’ affiliates provide distribution and shareholder services
to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant
to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any,
that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the
Federated Hermes Funds.
Conclusions
The Board
considered the CCO’s presentation and statements and the information accompanying the CCO Management Fee
Report. The Board recognized that its evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements
is a continuing and ongoing process that is informed by the information that the Board requests and receives from
management throughout the course of the year.
On the basis
of the information and factors summarized above, among other information and factors deemed relevant by the
Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation
of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances
and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations
identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them
to be determinative.
Annual
Financial Statements and Additional Information
24
Mutual funds are not
bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Investment in mutual funds involves investment risk, including the possible loss of principal.
This information is authorized
for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus,
which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes MDT All Cap Core Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31421R106
CUSIP 31421R205
CUSIP 31421R304
CUSIP 31421R718
CUSIP 31421R205
CUSIP 31421R304
CUSIP 31421R718
37309 (9/26)
©
2026 Federated Hermes, Inc.
Annual Financial Statements
and Additional Information
and Additional Information
July 31, 2026
|
Share
Class | Ticker
|
A | QABGX
|
C | QCBGX
|
Institutional | QIBGX
|
R6 | QKBGX
|
Federated Hermes MDT Balanced Fund
A Portfolio of Federated Hermes MDT Series
Not FDIC Insured ▪ May
Lose Value ▪ No Bank Guarantee
CONTENTS
Portfolio
of Investments
July 31, 2026
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMON
STOCKS—60.7% |
|
|
|
|
Communication
Services—5.4% |
|
|
30,474
|
|
Alphabet,
Inc., Class A |
$ 10,852,706
|
|
16,131
|
1
|
CarGurus,
Inc. |
584,587
|
|
21,112
|
1
|
Cars.com,
Inc. |
250,177
|
|
7,307
|
1
|
Charter
Communications, Inc. |
1,059,369
|
|
2,948
|
|
Meta
Platforms, Inc. |
1,641,181
|
|
37,305
|
1
|
Netflix,
Inc. |
2,675,141
|
|
43,048
|
1
|
Optimum
Communications, Inc. |
32,811
|
|
12,419
|
1
|
Pinterest,
Inc. |
298,180
|
|
486
|
1
|
Reddit,
Inc. |
68,366
|
|
20,117
|
1
|
Trade
Desk, Inc./The |
362,911
|
|
2,598
|
|
Verizon
Communications, Inc. |
121,612
|
|
12,922
|
1
|
ZoomInfo
Technologies, Inc. |
42,643
|
|
|
|
TOTAL
|
17,989,684
|
|
|
|
Consumer
Discretionary—6.2% |
|
|
35,999
|
|
Advance
Auto Parts, Inc. |
1,999,385
|
|
826
|
1
|
Airbnb,
Inc. |
125,156
|
|
21,904
|
1
|
Amazon.com,
Inc. |
5,948,688
|
|
6,656
|
1
|
Capri
Holdings Ltd. |
106,030
|
|
2,517
|
1
|
Chipotle
Mexican Grill, Inc. |
93,683
|
|
3,515
|
1
|
Deckers
Outdoor Corp. |
340,533
|
|
464
|
1
|
Duolingo,
Inc. |
62,552
|
|
3,599
|
|
Expedia
Group, Inc. |
1,060,769
|
|
9,017
|
1
|
Five
Below, Inc. |
1,957,861
|
|
22,641
|
|
Ford
Motor Co. |
332,370
|
|
736
|
|
General
Motors Co. |
65,401
|
|
15,297
|
1
|
Goodyear
Tire & Rubber Co. |
106,314
|
|
10,436
|
1
|
Lululemon
Athletica, Inc. |
1,240,527
|
|
644
|
|
Murphy
USA, Inc. |
391,397
|
|
3,176
|
1
|
SharkNinja,
Inc. |
513,782
|
|
5,483
|
1
|
Tesla,
Inc. |
1,706,364
|
|
4,448
|
|
TJX
Cos., Inc. |
699,848
|
|
711
|
1
|
Ulta
Beauty, Inc. |
364,622
|
|
30,877
|
1
|
Viking
Holdings Ltd. |
3,222,015
|
|
1,216
|
|
Yum!
Brands, Inc. |
186,389
|
|
|
|
TOTAL
|
20,523,686
|
|
|
|
Consumer
Staples—2.5% |
|
|
11,638
|
|
Albertsons
Cos., Inc. |
134,768
|
|
3,353
|
|
Altria
Group, Inc. |
229,110
|
|
2,710
|
|
Coca-Cola
Bottling Co. |
509,209
|
|
3,573
|
|
Costco
Wholesale Corp. |
3,401,103
|
|
3,638
|
|
Kimberly-Clark
Corp. |
397,670
|
|
21,095
|
1
|
Maplebear,
Inc. |
940,837
|
|
2,017
|
|
PepsiCo,
Inc. |
281,493
|
|
564
|
|
Philip
Morris International, Inc. |
107,622
|
|
20,893
|
|
WalMart,
Inc. |
2,323,302
|
|
|
|
TOTAL
|
8,325,114
|
|
|
|
Energy—1.4%
|
|
|
336
|
|
Chevron
Corp. |
66,135
|
|
5,480
|
|
EOG
Resources, Inc. |
814,821
|
Annual
Financial Statements and Additional Information
1
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Energy—continued
|
|
|
7,034
|
1
|
ExxonMobil
Holdings Corp. |
$ 1,093,365
|
|
3,074
|
|
Occidental
Petroleum Corp. |
175,433
|
|
11,786
|
|
PBF
Energy, Inc. |
851,892
|
|
235
|
|
Targa
Resources, Inc. |
63,537
|
|
1,081
|
|
TechnipFMC
PLC |
77,464
|
|
10,462
|
|
Weatherford
International PLC |
918,459
|
|
6,979
|
|
Williams
Cos., Inc. |
499,278
|
|
|
|
TOTAL
|
4,560,384
|
|
|
|
Financials—8.0%
|
|
|
4,958
|
|
Ameriprise
Financial, Inc. |
2,706,275
|
|
15,192
|
|
Bank
of New York Mellon Corp. |
2,374,965
|
|
1,512
|
|
Cboe
Global Markets, Inc. |
469,068
|
|
2,474
|
|
Charles
Schwab Corp. |
260,364
|
|
78,588
|
1
|
Fiserv,
Inc. |
4,239,037
|
|
1,950
|
|
Globe
Life, Inc. |
355,388
|
|
448
|
|
Goldman
Sachs Group, Inc. |
456,234
|
|
5,391
|
|
Interactive
Brokers Group, Inc., Class A |
474,354
|
|
23,737
|
|
Jackson
Financial, Inc. |
2,902,560
|
|
997
|
|
Morgan
Stanley |
209,789
|
|
10,570
|
|
Northern
Trust Corp. |
1,925,748
|
|
4,850
|
1
|
Oscar
Health, Inc. |
151,417
|
|
18,536
|
|
Prudential
Financial, Inc. |
2,262,875
|
|
21,026
|
|
State
Street Corp. |
3,872,148
|
|
942
|
|
The
Hartford Insurance Group, Inc. |
133,679
|
|
7,990
|
|
The
Travelers Cos., Inc. |
2,991,136
|
|
10,476
|
|
Virtu
Financial, Inc. |
615,256
|
|
31,056
|
|
Western
Union Co. |
197,516
|
|
|
|
TOTAL
|
26,597,809
|
|
|
|
Health
Care—6.2% |
|
|
16,203
|
|
AbbVie,
Inc. |
4,065,981
|
|
1,837
|
1
|
Align
Technology, Inc. |
310,747
|
|
549
|
1
|
Alnylam
Pharmaceuticals, Inc. |
112,830
|
|
4,353
|
|
Amgen,
Inc. |
1,676,602
|
|
7,913
|
1
|
AnaptysBio,
Inc. |
422,238
|
|
829
|
1
|
Biogen,
Inc. |
168,246
|
|
1,532
|
1
|
BioMarin
Pharmaceutical, Inc. |
91,951
|
|
1,694
|
|
Cardinal
Health, Inc. |
389,671
|
|
2,107
|
|
Cencora,
Inc. |
655,993
|
|
1,010
|
1
|
Charles
River Laboratories International, Inc. |
234,835
|
|
28,629
|
1
|
Community
Health Systems, Inc. |
79,875
|
|
17,996
|
1
|
Elanco
Animal Health, Inc. |
474,555
|
|
1,571
|
|
Eli
Lilly & Co. |
1,804,828
|
|
7,197
|
|
Gilead
Sciences, Inc. |
937,121
|
|
624
|
|
Humana,
Inc. |
227,049
|
|
6,050
|
1
|
Illumina,
Inc. |
1,240,855
|
|
5,224
|
1
|
Incyte
Corp. |
624,372
|
|
338
|
1
|
Insulet
Corp. |
55,888
|
|
1,627
|
1
|
Intuitive
Surgical, Inc. |
574,868
|
|
7,732
|
|
Johnson
& Johnson |
1,982,098
|
|
2,428
|
1
|
Liquidia
Corp. |
204,219
|
|
7,731
|
1
|
Moderna,
Inc. |
423,813
|
|
5,672
|
1
|
Omnicell,
Inc. |
200,619
|
Annual
Financial Statements and Additional Information
2
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Health
Care—continued |
|
|
1,734
|
|
Regeneron
Pharmaceuticals, Inc. |
$ 1,322,400
|
|
724
|
|
Teleflex,
Inc. |
98,978
|
|
2,463
|
|
UnitedHealth
Group, Inc. |
1,020,667
|
|
3,926
|
1
|
Veeva
Systems, Inc. |
800,040
|
|
492
|
1
|
Vertex
Pharmaceuticals, Inc. |
234,733
|
|
|
|
TOTAL
|
20,436,072
|
|
|
|
Industrials—6.2%
|
|
|
1,156
|
|
Allegion
PLC |
181,954
|
|
8,207
|
|
Allison
Transmission Holdings, Inc. |
940,030
|
|
12,831
|
|
Atmus
Filtration Technologies, Inc. |
662,465
|
|
283
|
|
Automatic
Data Processing, Inc. |
75,408
|
|
402
|
1
|
Bloom
Energy Corp. |
82,736
|
|
838
|
|
C.H.
Robinson Worldwide, Inc. |
123,798
|
|
182
|
|
Caterpillar,
Inc. |
148,295
|
|
11,222
|
1
|
Copart,
Inc. |
326,785
|
|
9,775
|
|
GE
Aerospace |
3,519,684
|
|
3,756
|
|
GE
Vernova, Inc. |
3,719,529
|
|
1,258
|
|
General
Dynamics Corp. |
482,342
|
|
4,060
|
|
Johnson
Controls International PLC |
595,440
|
|
1,988
|
|
Lennox
International, Inc. |
826,770
|
|
1,602
|
|
Lockheed
Martin Corp. |
933,550
|
|
382
|
|
Northrop
Grumman Corp. |
207,227
|
|
4,245
|
|
Paycom
Software, Inc. |
696,010
|
|
17,484
|
|
Pitney
Bowes, Inc. |
306,495
|
|
124
|
|
Rockwell
Automation, Inc. |
59,530
|
|
6,132
|
|
RTX
Corp. |
1,319,729
|
|
732
|
|
Ryder
System, Inc. |
187,699
|
|
10,643
|
|
Southwest
Airlines Co. |
478,616
|
|
6,476
|
1
|
SPX
Technologies, Inc. |
1,422,259
|
|
553
|
|
Trane
Technologies PLC |
251,587
|
|
9,412
|
1
|
Uber
Technologies, Inc. |
662,228
|
|
2,268
|
1
|
United
Airlines Holdings, Inc. |
275,176
|
|
18,168
|
|
Veralto
Corp. |
1,710,881
|
|
691
|
|
Vertiv
Holdings Co. |
166,925
|
|
|
|
TOTAL
|
20,363,148
|
|
|
|
Information
Technology—18.9% |
|
|
1,925
|
1
|
Adobe,
Inc. |
482,039
|
|
2,409
|
1
|
Advanced
Micro Devices, Inc. |
1,147,045
|
|
242
|
|
Analog
Devices, Inc. |
88,913
|
|
39,264
|
|
Apple,
Inc. |
12,129,042
|
|
2,167
|
|
Applied
Materials, Inc. |
1,100,121
|
|
8,488
|
1
|
Arista
Networks, Inc. |
1,530,811
|
|
236
|
1
|
Astera
Labs, Inc. |
73,450
|
|
3,833
|
1
|
Atlassian
Corp. PLC |
387,191
|
|
10,506
|
|
Broadcom,
Inc. |
4,089,776
|
|
4,701
|
1
|
Cirrus
Logic, Inc. |
608,074
|
|
8,297
|
|
Cisco
Systems, Inc. |
962,369
|
|
452
|
|
Corning,
Inc. |
62,489
|
|
8,092
|
1
|
Crowdstrike
Holdings, Inc. |
1,544,439
|
|
14,042
|
1
|
DXC
Technology Co. |
157,832
|
|
7,396
|
1
|
Enphase
Energy, Inc. |
277,646
|
|
12,031
|
1
|
Fortinet,
Inc. |
1,948,420
|
Annual
Financial Statements and Additional Information
3
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Information
Technology—continued |
|
|
3,508
|
1
|
Gartner,
Inc., Class A |
$ 529,778
|
|
7,763
|
1
|
GoDaddy,
Inc. |
642,311
|
|
7,558
|
|
Hewlett
Packard Enterprise Co. |
362,028
|
|
12,575
|
1
|
Intel
Corp. |
1,134,265
|
|
7,295
|
|
Intuit,
Inc. |
2,305,731
|
|
183
|
1
|
Keysight
Technologies, Inc. |
58,392
|
|
723
|
|
KLA
Corp. |
132,179
|
|
2,664
|
|
Lam
Research Corp. |
780,605
|
|
293
|
1
|
Lumentum
Holdings, Inc. |
209,184
|
|
3,301
|
|
Micron
Technology, Inc. |
2,716,822
|
|
14,659
|
|
Microsoft
Corp. |
6,812,331
|
|
4,044
|
|
NetApp,
Inc. |
721,854
|
|
63,780
|
|
NVIDIA
Corp. |
12,803,835
|
|
1,131
|
1
|
Onto
Innovation, Inc. |
292,454
|
|
5,556
|
|
Pegasystems,
Inc. |
169,736
|
|
3,495
|
1
|
Qnity
Electronics, Inc. |
458,474
|
|
939
|
1
|
Sandisk
Corp. |
1,140,725
|
|
10,095
|
|
Skyworks
Solutions, Inc. |
628,717
|
|
2,028
|
|
TD
SYNNEX Corp. |
518,560
|
|
2,530
|
|
Teradyne,
Inc. |
930,256
|
|
6,797
|
|
Texas
Instruments, Inc. |
1,874,205
|
|
498
|
1
|
Tyler
Technologies, Inc. |
154,181
|
|
7,238
|
|
Vishay
Intertechnology, Inc. |
247,684
|
|
93
|
|
Western
Digital Corp. |
50,670
|
|
15,452
|
|
Xerox
Holdings Corp. |
45,583
|
|
|
|
TOTAL
|
62,310,217
|
|
|
|
Materials—1.2%
|
|
|
2,838
|
|
Albemarle
Corp. |
333,863
|
|
13,347
|
|
Alcoa
Corp. |
604,085
|
|
21,518
|
|
Celanese
Corp. |
962,285
|
|
21,565
|
|
Newmont
Corp. |
2,020,856
|
|
|
|
TOTAL
|
3,921,089
|
|
|
|
Real
Estate—3.5% |
|
|
10,500
|
|
Acadia
Realty Trust |
235,935
|
|
4,400
|
|
American
Homes 4 Rent |
147,048
|
|
2,500
|
|
American
Tower Corp. |
433,400
|
|
2,800
|
|
BXP,
Inc. |
196,336
|
|
2,900
|
|
Camden
Property Trust |
321,349
|
|
16,167
|
1
|
CoStar
Group, Inc. |
464,963
|
|
6,000
|
|
Cousins
Properties, Inc. |
189,300
|
|
4,500
|
|
Cubesmart
|
186,570
|
|
5,500
|
|
Curbline
Properties Corp. |
168,520
|
|
32,500
|
|
DiamondRock
Hospitality Co. |
430,300
|
|
3,450
|
|
Digital
Realty Trust, Inc. |
650,394
|
|
2,150
|
|
EastGroup
Properties, Inc. |
449,372
|
|
540
|
|
Equinix,
Inc. |
550,411
|
|
1,600
|
|
Essex
Property Trust, Inc. |
454,624
|
|
16,000
|
|
Host
Hotels & Resorts, Inc. |
402,080
|
|
2,000
|
|
Iron
Mountain, Inc. |
244,640
|
|
10,200
|
|
Kite
Realty Group Trust |
291,924
|
|
26,300
|
|
Macerich
Co. (The) |
679,592
|
|
27,600
|
|
Park
Hotels & Resorts, Inc. |
415,656
|
Annual
Financial Statements and Additional Information
4
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Real
Estate—continued |
|
|
13,000
|
|
Pebblebrook
Hotel Trust |
$ 248,300
|
|
6,250
|
|
ProLogis,
Inc. |
903,812
|
|
1,200
|
|
Public
Storage |
389,004
|
|
4,200
|
|
Simon
Property Group, Inc. |
963,354
|
|
26,000
|
|
Sunstone
Hotel Investors, Inc. |
306,020
|
|
3,700
|
|
Terreno
Realty Corp. |
265,105
|
|
5,800
|
|
Ventas,
Inc. |
542,358
|
|
4,500
|
|
Welltower,
Inc. |
1,054,980
|
|
|
|
TOTAL
|
11,585,347
|
|
|
|
Utilities—1.2%
|
|
|
1,720
|
|
American
Electric Power Co., Inc. |
219,902
|
|
1,058
|
|
DTE
Energy Co. |
150,099
|
|
12,540
|
|
Duke
Energy Corp. |
1,572,892
|
|
9,147
|
|
Edison
International |
671,115
|
|
28,384
|
|
Exelon
Corp. |
1,300,555
|
|
|
|
TOTAL
|
3,914,563
|
|
|
|
TOTAL
COMMON STOCKS
(IDENTIFIED
COST $152,977,880) |
200,527,113
|
|
|
|
CORPORATE
BONDS—9.2% |
|
|
|
|
Basic
Industry - Metals & Mining—0.3% |
|
|
$ 300,000
|
|
Anglo
American Capital PLC, Sr. Unsecd. Note, 144A, 5.250%, 3/19/2036 |
291,247
|
|
200,000
|
|
Anglo
American Capital PLC, Sr. Unsecd. Note, 144A, 5.500%, 5/2/2033 |
200,111
|
|
15,000
|
|
Anglogold
Ashanti Holdings PLC, Sr. Note, 6.500%, 4/15/2040 |
15,533
|
|
155,000
|
|
Glencore
Funding LLC, Sr. Unsecd. Note, 144A, 4.900%, 7/1/2031 |
153,348
|
|
300,000
|
|
Southern
Copper Corp., Sr. Unsecd. Note, 5.350%, 6/24/2036 |
291,501
|
|
|
|
TOTAL
|
951,740
|
|
|
|
Capital
Goods - Aerospace & Defense—0.1% |
|
|
200,000
|
|
BAE
Systems PLC, Sr. Unsecd. Note, 144A, 3.000%, 9/15/2050 |
126,107
|
|
250,000
|
|
L3Harris
Technologies, Inc., Sr. Unsecd. Note, 5.500%, 8/15/2054 |
230,279
|
|
15,000
|
|
Spirit
AeroSystems, Inc., Sr. Unsecd. Note, 4.600%, 6/15/2028 |
14,938
|
|
40,000
|
2
|
Textron
Financial Corp., Jr. Sub. Note, 144A, 5.647% (CME Term SOFR 3 Month +1.996%), 2/15/2042 |
36,531
|
|
|
|
TOTAL
|
407,855
|
|
|
|
Capital
Goods - Building Materials—0.1% |
|
|
225,000
|
|
Allegion
US Holdings Co., Inc., Sr. Unsecd. Note, 5.600%, 5/29/2034 |
226,533
|
|
85,000
|
|
Carrier
Global Corp., Sr. Unsecd. Note, 6.200%, 3/15/2054 |
86,597
|
|
|
|
TOTAL
|
313,130
|
|
|
|
Capital
Goods - Construction Machinery—0.2% |
|
|
275,000
|
|
CNH
Industrial Capital America LLC, Sr. Unsecd. Note, 4.375%, 3/7/2031 |
266,762
|
|
255,000
|
|
CNH
Industrial Capital America LLC, Sr. Unsecd. Note, 4.550%, 4/10/2028 |
253,975
|
|
|
|
TOTAL
|
520,737
|
|
|
|
Capital
Goods - Diversified Manufacturing—0.1% |
|
|
65,000
|
|
Ingersoll-Rand,
Inc., Sr. Unsecd. Note, 5.700%, 6/15/2054 |
61,551
|
|
60,000
|
|
Lennox
International, Inc., Sr. Unsecd. Note, 1.700%, 8/1/2027 |
58,338
|
|
200,000
|
|
Siemens
Funding B.V., Sr. Unsecd. Note, 144A, 5.200%, 5/28/2035 |
199,706
|
|
|
|
TOTAL
|
319,595
|
|
|
|
Capital
Goods - Environmental—0.1% |
|
|
190,000
|
|
Waste
Connections, Inc., Sr. Unsecd. Note, 5.250%, 9/1/2035 |
189,499
|
|
|
|
Communications
- Cable & Satellite—0.1% |
|
|
300,000
|
|
Charter
Communications Operating, LLC/Charter Communications Operating Capital Corp., Sec. Fac. Bond,
2.250%,
1/15/2029 |
277,713
|
|
145,000
|
|
Comcast
Corp., Sr. Unsecd. Note, 2.800%, 1/15/2051 |
76,408
|
|
15,000
|
|
Comcast
Corp., Sr. Unsecd. Note, 3.900%, 3/1/2038 |
12,259
|
Annual
Financial Statements and Additional Information
5
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
CORPORATE
BONDS—continued |
|
|
|
|
Communications
- Cable & Satellite—continued |
|
|
$ 10,000
|
|
Comcast
Corp., Sr. Unsecd. Note, 4.400%, 8/15/2035 |
$ 9,040
|
|
|
|
TOTAL
|
375,420
|
|
|
|
Communications
- Media & Entertainment—0.1% |
|
|
30,000
|
|
Grupo
Televisa SAB, Sr. Unsecd. Note, 6.125%, 1/31/2046 |
23,297
|
|
200,000
|
|
Meta
Platforms, Inc., Sr. Unsecd. Note, 5.550%, 8/15/2064 |
160,108
|
|
180,000
|
|
Meta
Platforms, Inc., Sr. Unsecd. Note, 6.300%, 5/15/2056 |
165,347
|
|
|
|
TOTAL
|
348,752
|
|
|
|
Communications
- Telecom Wireless—0.4% |
|
|
350,000
|
|
Crown
Castle, Inc., Sr. Unsecd. Note, 5.100%, 5/1/2033 |
340,740
|
|
200,000
|
|
Orange
S.A., Sr. Unsecd. Note, 144A, 5.000%, 1/13/2036 |
190,585
|
|
300,000
|
|
T-Mobile
USA, Inc., Sr. Unsecd. Note, 5.050%, 7/15/2033 |
293,459
|
|
180,000
|
|
T-Mobile
USA, Inc., Sr. Unsecd. Note, 5.500%, 1/15/2055 |
154,870
|
|
200,000
|
|
Vodafone
Group PLC, Sr. Unsecd. Note, 5.350%, 6/18/2036 |
193,605
|
|
250,000
|
|
Vodafone
Group PLC, Sr. Unsecd. Note, 5.750%, 6/28/2054 |
225,669
|
|
|
|
TOTAL
|
1,398,928
|
|
|
|
Communications
- Telecom Wirelines—0.4% |
|
|
275,000
|
|
AT&T,
Inc., Sr. Secd. Note, 6.050%, 8/15/2056 |
249,044
|
|
12,000
|
|
AT&T,
Inc., Sr. Unsecd. Note, 3.500%, 9/15/2053 |
7,256
|
|
11,000
|
|
AT&T,
Inc., Sr. Unsecd. Note, 3.650%, 9/15/2059 |
6,524
|
|
5,000
|
|
AT&T,
Inc., Sr. Unsecd. Note, 4.500%, 5/15/2035 |
4,591
|
|
350,000
|
|
AT&T,
Inc., Sr. Unsecd. Note, 6.200%, 10/30/2056 |
324,256
|
|
180,000
|
|
Beacon
Point Dc LLC, 144A, 6.129%, 11/30/2042 |
172,825
|
|
150,000
|
|
Telefonica
Emisiones SAU, Sr. Unsecd. Note, 5.520%, 3/1/2049 |
131,139
|
|
90,000
|
|
Verizon
Communications, Inc., Sr. Unsecd. Note, 3.150%, 3/22/2030 |
84,811
|
|
230,000
|
|
Verizon
Communications, Inc., Sr. Unsecd. Note, 5.875%, 11/30/2055 |
210,251
|
|
|
|
TOTAL
|
1,190,697
|
|
|
|
Consumer
Cyclical - Automotive—0.3% |
|
|
275,000
|
|
Ford
Motor Credit Co. LLC, Sr. Unsecd. Note, 6.050%, 3/5/2031 |
277,390
|
|
175,000
|
|
General
Motors Financial Co., Inc., Sr. Unsecd. Note, 3.100%, 1/12/2032 |
157,027
|
|
175,000
|
|
General
Motors Financial Co., Inc., Sr. Unsecd. Note, 5.750%, 2/8/2031 |
178,663
|
|
225,000
|
|
General
Motors Financial Co., Inc., Sr. Unsecd. Note, 6.150%, 7/15/2035 |
230,296
|
|
225,000
|
|
Hyundai
Capital America, Sr. Unsecd. Note, 144A, 5.400%, 6/23/2032 |
225,917
|
|
10,000
|
|
Mercedes-Benz
Finance NA LLC, Co. Guarantee, 8.500%, 1/18/2031 |
11,347
|
|
|
|
TOTAL
|
1,080,640
|
|
|
|
Consumer
Cyclical - Retailers—0.0% |
|
|
170,000
|
|
AutoNation,
Inc., Sr. Unsecd. Note, 4.750%, 6/1/2030 |
167,493
|
|
|
|
Consumer
Cyclical - Services—0.2% |
|
|
195,000
|
|
Amazon.com,
Inc., 4.100%, 11/20/2030 |
188,950
|
|
300,000
|
|
Expedia
Group, Inc., Sr. Unsecd. Note, 5.500%, 4/15/2036 |
291,111
|
|
15,000
|
|
Expedia
Group, Inc., Sr. Unsecd. Note, Series WI, 3.250%, 2/15/2030 |
14,150
|
|
200,000
|
|
Sodexo,
Inc., Sr. Secd. Note, 144A, 5.800%, 8/15/2035 |
200,250
|
|
10,000
|
|
University
of Southern California, Sr. Unsecd. Note, 5.250%, 10/1/2111 |
8,654
|
|
|
|
TOTAL
|
703,115
|
|
|
|
Consumer
Non-Cyclical - Food/Beverage—0.3% |
|
|
30,000
|
|
Anheuser-Busch
Cos. LLC / Anheuser-Busch InBev Worldwide, Inc., Sr. Unsecd. Note, 4.700%, 2/1/2036 |
28,547
|
|
300,000
|
|
Constellation
Brands, Inc., Sr. Unsecd. Note, 4.900%, 5/1/2033 |
292,359
|
|
300,000
|
|
Danone
S.A., Sr. Unsecd. Note, 144A, 2.947%, 11/2/2026 |
298,995
|
|
270,000
|
|
Heineken
NV, Sr. Unsecd. Note, 144A, 3.500%, 1/29/2028 |
265,980
|
|
15,000
|
|
Kraft
Heinz Foods Co., Sr. Unsecd. Note, 5.200%, 7/15/2045 |
12,910
|
|
|
|
TOTAL
|
898,791
|
|
|
|
Consumer
Non-Cyclical - Health Care—0.2% |
|
|
200,000
|
|
180
Medical, Inc., Sr. Unsecd. Note, 144A, 5.300%, 10/8/2035 |
191,863
|
Annual
Financial Statements and Additional Information
6
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
CORPORATE
BONDS—continued |
|
|
|
|
Consumer
Non-Cyclical - Health Care—continued |
|
|
$ 105,000
|
|
GE
HealthCare Technologies, Inc., Sr. Unsecd. Note, 6.377%, 11/22/2052 |
$ 106,786
|
|
300,000
|
|
HCA,
Inc., Sr. Unsecd. Note, 5.500%, 6/1/2033 |
301,457
|
|
|
|
TOTAL
|
600,106
|
|
|
|
Consumer
Non-Cyclical - Pharmaceuticals—0.3% |
|
|
500,000
|
|
AbbVie,
Inc., Sr. Unsecd. Note, 4.250%, 11/21/2049 |
389,443
|
|
15,000
|
|
Amgen,
Inc., Sr. Unsecd. Note, 4.400%, 5/1/2045 |
12,205
|
|
10,000
|
|
Bristol-Myers
Squibb Co., Sr. Unsecd. Note, Series WI, 4.125%, 6/15/2039 |
8,682
|
|
400,000
|
|
Eli
Lilly & Co., Sr. Unsecd. Note, 5.600%, 5/20/2056 |
381,542
|
|
15,000
|
|
Johnson
& Johnson, Sr. Unsecd. Note, 3.550%, 3/1/2036 |
13,326
|
|
260,000
|
|
Pfizer,
Inc., Sr. Unsecd. Note, 4.200%, 11/15/2030 |
254,282
|
|
|
|
TOTAL
|
1,059,480
|
|
|
|
Consumer
Non-Cyclical - Products—0.1% |
|
|
500,000
|
|
Clorox
Co., Sr. Unsecd. Note, 5.250%, 5/15/2036 |
487,392
|
|
|
|
Consumer
Non-Cyclical - Tobacco—0.1% |
|
|
450,000
|
|
Philip
Morris International, Inc., Sr. Unsecd. Note, 5.750%, 11/17/2032 |
465,773
|
|
|
|
Energy
- Independent—0.2% |
|
|
50,000
|
|
APA
Corp., Sr. Unsecd. Note, 6.100%, 2/15/2035 |
50,786
|
|
5,000
|
|
ConocoPhillips
Co., Sr. Unsecd. Note, 4.025%, 3/15/2062 |
3,455
|
|
125,000
|
|
Devon
Energy Corp., Sr. Unsecd. Note, 144A, 3.900%, 5/15/2027 |
124,650
|
|
6,000
|
|
EQT
Corp., Sr. Unsecd. Note, 3.900%, 10/1/2027 |
5,945
|
|
250,000
|
|
Occidental
Petroleum Corp., 5.550%, 10/1/2034 |
250,830
|
|
125,000
|
|
Ovintiv,
Inc., Sr. Unsecd. Note, 7.100%, 7/15/2053 |
133,916
|
|
|
|
TOTAL
|
569,582
|
|
|
|
Energy
- Integrated—0.2% |
|
|
300,000
|
|
BP
Capital Markets America, Inc., Sr. Unsecd. Note, 3.937%, 9/21/2028 |
296,116
|
|
170,000
|
|
BP
Capital Markets America, Inc., Sr. Unsecd. Note, 4.893%, 9/11/2033 |
166,860
|
|
150,000
|
|
Cenovus
Energy, Inc., Sr. Unsecd. Note, 5.400%, 3/20/2036 |
146,216
|
|
|
|
TOTAL
|
609,192
|
|
|
|
Energy
- Midstream—0.8% |
|
|
125,000
|
|
Boardwalk
Pipeline Partners LP, Sr. Unsecd. Note, 3.600%, 9/1/2032 |
114,719
|
|
400,000
|
|
Columbia
Pipelines Operating Co. LLC, Sr. Unsecd. Note, 144A, 5.507%, 5/15/2036 |
393,488
|
|
400,000
|
|
Enbridge,
Inc., Sr. Unsecd. Note, 5.200%, 11/20/2035 |
390,495
|
|
275,000
|
|
Enbridge,
Inc., Sr. Unsecd. Note, 5.950%, 4/5/2054 |
263,288
|
|
20,000
|
|
Energy
Transfer LP, Sr. Unsecd. Note, 5.500%, 6/1/2027 |
20,118
|
|
115,000
|
|
Energy
Transfer LP, Sr. Unsecd. Note, 5.950%, 5/15/2054 |
105,703
|
|
10,000
|
|
Energy
Transfer LP, Sr. Unsecd. Note, 6.125%, 12/15/2045 |
9,605
|
|
170,000
|
|
Enterprise
Products Operating LLC, Sr. Unsecd. Note, 3.950%, 2/15/2027 |
169,772
|
|
20,000
|
|
Kinder
Morgan Energy Partners LP, Sr. Unsecd. Note, Series MTN, 6.950%, 1/15/2038 |
21,859
|
|
40,000
|
|
MPLX
LP, Sr. Unsecd. Note, 4.125%, 3/1/2027 |
39,947
|
|
5,000
|
|
MPLX
LP, Sr. Unsecd. Note, 4.500%, 4/15/2038 |
4,429
|
|
350,000
|
|
National
Fuel Gas Co., Sr. Unsecd. Note, 5.500%, 5/15/2036 |
339,657
|
|
70,000
|
|
Targa
Resources, Inc., Sr. Unsecd. Note, 4.200%, 2/1/2033 |
65,390
|
|
325,000
|
|
Targa
Resources, Inc., Sr. Unsecd. Note, 5.650%, 2/15/2036 |
324,893
|
|
5,000
|
|
TransCanada
PipeLines Ltd., Sr. Unsecd. Note, 6.200%, 10/15/2037 |
5,183
|
|
10,000
|
|
Western
Midstream Operating, LP, Sr. Unsecd. Note, 4.750%, 8/15/2028 |
9,999
|
|
250,000
|
|
Williams
Cos., Inc., Sr. Unsecd. Note, 5.300%, 9/30/2035 |
244,220
|
|
|
|
TOTAL
|
2,522,765
|
|
|
|
Energy
- Refining—0.1% |
|
|
15,000
|
|
Marathon
Petroleum Corp., Sr. Unsecd. Note, 4.500%, 4/1/2048 |
11,786
|
|
10,000
|
|
Marathon
Petroleum Corp., Sr. Unsecd. Note, 6.500%, 3/1/2041 |
10,460
|
|
15,000
|
|
Valero
Energy Corp., Sr. Unsecd. Note, 4.350%, 6/1/2028 |
14,933
|
Annual
Financial Statements and Additional Information
7
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
CORPORATE
BONDS—continued |
|
|
|
|
Energy
- Refining—continued |
|
|
$ 300,000
|
|
Valero
Energy Corp., Sr. Unsecd. Note, 5.150%, 3/10/2036 |
$ 289,980
|
|
|
|
TOTAL
|
327,159
|
|
|
|
Financial
Institution - Banking—1.5% |
|
|
350,000
|
|
Bank
of America Corp., Sr. Unsecd. Note, 5.288%, 4/25/2034 |
349,169
|
|
220,000
|
|
Bank
of America Corp., Sub. Note, 5.489%, 4/23/2037 |
214,412
|
|
195,000
|
|
Bank
of New York Mellon Corp., Sr. Unsecd. Note, 4.540%, 4/23/2032 |
191,121
|
|
70,000
|
|
Bank
of New York Mellon Corp., Sr. Unsecd. Note, 5.316%, 6/6/2036 |
69,642
|
|
300,000
|
|
Citibank,
N.A., Sr. Unsecd. Note, 4.846%, 6/18/2032 |
296,506
|
|
165,000
|
|
Citigroup,
Inc., Sr. Unsecd. Note, 3.057%, 1/25/2033 |
147,996
|
|
15,000
|
|
Citigroup,
Inc., Sub. Note, 4.450%, 9/29/2027 |
14,965
|
|
75,000
|
|
Citizens
Financial Group, Inc., Sr. Unsecd. Note, 5.841%, 1/23/2030 |
76,523
|
|
215,000
|
|
FNB
Corp. (PA), 5.722%, 12/11/2030 |
215,377
|
|
350,000
|
|
Goldman
Sachs Group, Inc., Sr. Unsecd. Note, 5.425%, 6/3/2037 |
342,053
|
|
150,000
|
|
Goldman
Sachs Group, Inc., Sr. Unsecd. Note, 6.250%, 2/1/2041 |
154,321
|
|
15,000
|
|
JPMorgan
Chase & Co., Sr. Unsecd. Note, 3.882%, 7/24/2038 |
12,926
|
|
300,000
|
|
JPMorgan
Chase & Co., Sr. Unsecd. Note, 5.148%, 4/23/2037 |
291,008
|
|
150,000
|
|
KeyCorp,
Sr. Unsecd. Note, 6.401%, 3/6/2035 |
156,637
|
|
100,000
|
|
M&T
Bank Corp., Sr. Unsecd. Note, Series MTN, 5.385%, 1/16/2036 |
97,974
|
|
350,000
|
|
Morgan
Stanley Private Bank NA, Sr. Unsecd. Note, 4.465%, 11/19/2031 |
340,731
|
|
100,000
|
|
Morgan
Stanley, Sr. Unsecd. Note, 2.943%, 1/21/2033 |
89,027
|
|
180,000
|
|
Morgan
Stanley, Sr. Unsecd. Note, 5.250%, 4/21/2034 |
178,310
|
|
105,000
|
|
Morgan
Stanley, Sr. Unsecd. Note, 5.831%, 4/19/2035 |
106,982
|
|
160,000
|
|
Pinnacle
Financial Partners, Inc., Sr. Unsecd. Note, 6.168%, 11/1/2030 |
162,848
|
|
240,000
|
|
PNC
Financial Services Group, Inc., Sr. Unsecd. Note, 5.582%, 6/12/2029 |
243,582
|
|
165,000
|
|
Regions
Financial Corp., Sr. Unsecd. Note, 5.722%, 6/6/2030 |
168,408
|
|
10,000
|
|
State
Street Corp., Sub. Deb., 3.031%, 11/1/2034 |
9,349
|
|
205,000
|
|
Truist
Financial Corp., Sr. Unsecd. Note, 4.597%, 1/27/2032 |
200,187
|
|
300,000
|
|
U.S.
Bancorp, Sr. Unsecd. Note, 5.836%, 6/12/2034 |
307,500
|
|
250,000
|
|
U.S.
Bancorp, Sr. Unsecd. Note, Series MTN, 1.375%, 7/22/2030 |
218,649
|
|
200,000
|
|
Wells
Fargo & Co., Sr. Unsecd. Note, 5.499%, 1/23/2035 |
200,465
|
|
10,000
|
|
Westpac
Banking Corp. Ltd., Sub., Series GMTN, 4.322%, 11/23/2031 |
9,983
|
|
|
|
TOTAL
|
4,866,651
|
|
|
|
Financial
Institution - Broker/Asset Mgr/Exchange—0.1% |
|
|
300,000
|
|
Jefferies
Financial Group, Inc., Sr. Unsecd. Note, 5.125%, 4/28/2031 |
293,748
|
|
70,000
|
|
Nuveen
LLC, Sr. Unsecd. Note, 144A, 4.000%, 11/1/2028 |
68,970
|
|
|
|
TOTAL
|
362,718
|
|
|
|
Financial
Institution - Finance Companies—0.2% |
|
|
220,000
|
|
Air
Lease Corp., Sr. Unsecd. Note, 5.850%, 12/15/2027 |
223,091
|
|
280,000
|
|
Aircastle
Ltd., Sr. Unsecd. Note, 144A, 5.000%, 5/15/2031 |
275,345
|
|
|
|
TOTAL
|
498,436
|
|
|
|
Financial
Institution - Insurance - Health—0.1% |
|
|
300,000
|
|
UnitedHealth
Group, Inc., Sr. Unsecd. Note, 4.750%, 5/15/2052 |
246,763
|
|
250,000
|
|
UnitedHealth
Group, Inc., Sr. Unsecd. Note, 5.150%, 7/15/2034 |
248,076
|
|
|
|
TOTAL
|
494,839
|
|
|
|
Financial
Institution - Insurance - Life—0.3% |
|
|
400,000
|
|
AIA
Group Ltd., Sub., 144A, 3.200%, 9/16/2040 |
298,458
|
|
105,000
|
|
Lincoln
Financial Global Funding, Secured Note, 144A, 4.950%, 5/21/2031 |
103,596
|
|
15,000
|
|
MetLife,
Inc., Jr. Sub. Note, 6.400%, 12/15/2036 |
15,139
|
|
10,000
|
|
MetLife,
Inc., Jr. Sub. Note, 10.750%, 8/1/2039 |
12,635
|
|
175,000
|
|
Northwestern
Mutual Life Insurance Co., Sub., 144A, 6.050%, 6/30/2056 |
170,814
|
|
15,000
|
|
Penn
Mutual Life Insurance Co., Sr. Note, 144A, 7.625%, 6/15/2040 |
17,004
|
|
350,000
|
|
PRICOA
Global Funding I, Secured Note, 144A, 4.350%, 11/25/2030 |
341,929
|
Annual
Financial Statements and Additional Information
8
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
CORPORATE
BONDS—continued |
|
|
|
|
Financial
Institution - Insurance - Life—continued |
|
|
$ 50,000
|
|
Prudential
Financial, Inc., Sr. Unsecd. Note, Series MTN, 6.200%, 11/15/2040 |
$ 51,072
|
|
|
|
TOTAL
|
1,010,647
|
|
|
|
Financial
Institution - Insurance - P&C—0.1% |
|
|
10,000
|
|
Berkshire
Hathaway Finance Corp., Sr. Unsecd. Note, 4.200%, 8/15/2048 |
7,817
|
|
300,000
|
|
Chubb
INA Holdings LLC., Sr. Unsecd. Note, 5.300%, 5/20/2036 |
297,144
|
|
55,000
|
|
Nationwide
Mutual Insurance Co., Sub., 144A, 4.350%, 4/30/2050 |
40,397
|
|
|
|
TOTAL
|
345,358
|
|
|
|
Financial
Institution - REIT - Apartment—0.2% |
|
|
250,000
|
|
Avalonbay
Communities, Inc., Sr. Unsecd. Note, 5.000%, 8/1/2035 |
243,680
|
|
60,000
|
|
Camden
Property Trust, Sr. Unsecd. Note, 2.800%, 5/15/2030 |
55,791
|
|
200,000
|
|
UDR,
Inc., Sr. Unsecd. Note, Series MTN, 2.100%, 8/1/2032 |
168,639
|
|
70,000
|
|
UDR,
Inc., Sr. Unsecd. Note, Series MTN, 2.950%, 9/1/2026 |
69,933
|
|
|
|
TOTAL
|
538,043
|
|
|
|
Financial
Institution - REIT - Healthcare—0.1% |
|
|
275,000
|
|
Welltower
OP LLC, Sr. Unsecd. Note, 5.125%, 7/1/2035 |
271,248
|
|
185,000
|
|
Welltower,
Inc., Sr. Unsecd. Note, 2.700%, 2/15/2027 |
183,491
|
|
|
|
TOTAL
|
454,739
|
|
|
|
Financial
Institution - REIT - Office—0.1% |
|
|
70,000
|
|
Alexandria
Real Estate Equities, Inc., Sr. Unsecd. Note, 3.950%, 1/15/2028 |
69,238
|
|
200,000
|
|
Alexandria
Real Estate Equities, Inc., Sr. Unsecd. Note, 5.500%, 10/1/2035 |
195,620
|
|
|
|
TOTAL
|
264,858
|
|
|
|
Financial
Institution - REIT - Other—0.0% |
|
|
70,000
|
|
Host
Hotels & Resorts LP, Sr. Unsecd. Note, 5.700%, 7/1/2034 |
70,031
|
|
|
|
Financial
Institution - REIT - Retail—0.1% |
|
|
275,000
|
|
Kimco
Realty Corp., Sr. Unsecd. Note, 5.300%, 2/1/2036 |
273,026
|
|
|
|
Technology—0.9%
|
|
|
10,000
|
|
Apple,
Inc., Sr. Unsecd. Note, 3.850%, 5/4/2043 |
7,949
|
|
165,000
|
|
Autodesk,
Inc., Sr. Unsecd. Note, 5.300%, 6/15/2035 |
162,282
|
|
70,000
|
|
Broadcom,
Inc., Sr. Unsecd. Note, 3.750%, 2/15/2051 |
47,332
|
|
220,000
|
|
Broadcom,
Inc., Sr. Unsecd. Note, 4.150%, 4/15/2032 |
207,085
|
|
20,000
|
|
Corning,
Inc., Unsecd. Note, 4.750%, 3/15/2042 |
17,673
|
|
250,000
|
|
Dell
International LLC / EMC Corp., Sr. Unsecd. Note, 4.750%, 7/15/2031 |
245,879
|
|
110,000
|
|
Fiserv,
Inc., Sr. Unsecd. Note, 3.500%, 7/1/2029 |
105,531
|
|
5,000
|
|
Global
Payments, Inc., Sr. Unsecd. Note, 3.200%, 8/15/2029 |
4,720
|
|
205,000
|
|
Global
Payments, Inc., Sr. Unsecd. Note, 5.550%, 11/15/2035 |
195,336
|
|
190,000
|
|
Hewlett
Packard Enterprise Co., Sr. Unsecd. Note, 5.250%, 4/1/2033 |
188,368
|
|
300,000
|
|
Intel
Corp., Sr. Unsecd. Note, 6.125%, 5/15/2056 |
281,738
|
|
300,000
|
|
Leidos,
Inc., Sr. Unsecd. Note, Series WI, 2.300%, 2/15/2031 |
265,273
|
|
7,000
|
|
Microsoft
Corp., Sr. Unsecd. Note, 2.921%, 3/17/2052 |
4,191
|
|
8,000
|
|
Microsoft
Corp., Sr. Unsecd. Note, 3.450%, 8/8/2036 |
6,926
|
|
190,000
|
|
Oracle
Corp., Sr. Unsecd. Note, 5.375%, 9/27/2054 |
138,659
|
|
200,000
|
|
Oracle
Corp., Sr. Unsecd. Note, 6.125%, 8/3/2065 |
158,291
|
|
500,000
|
|
Oracle
Corp., Sr. Unsecd. Note, 6.250%, 11/9/2032 |
496,365
|
|
175,000
|
|
Roper
Technologies, Inc., Sr. Unsecd. Note, 2.000%, 6/30/2030 |
156,055
|
|
150,000
|
|
Sopaipilla
Investor LLC, 144A, 7.534%, 11/30/2048 |
155,576
|
|
15,000
|
|
Visa,
Inc., Sr. Unsecd. Note, 4.150%, 12/14/2035 |
14,026
|
|
|
|
TOTAL
|
2,859,255
|
|
|
|
Transportation
- Services—0.1% |
|
|
15,000
|
|
Enterprise
Rent-A-Car USA Finance Co., Sr. Unsecd. Note, 144A, 5.625%, 3/15/2042 |
14,532
|
|
210,000
|
|
Penske
Truck Leasing Co. LP & PTL Finance Corp., Sr. Unsecd. Note, 144A, 5.550%, 5/1/2028 |
212,365
|
|
275,000
|
|
United
Parcel Service, Inc., Sr. Unsecd. Note, 5.950%, 5/14/2055 |
269,227
|
|
|
|
TOTAL
|
496,124
|
Annual
Financial Statements and Additional Information
9
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
CORPORATE
BONDS—continued |
|
|
|
|
Utility
- Electric—0.6% |
|
|
$ 200,000
|
|
Alabama
Power Co., Sr. Unsecd. Note, 3.000%, 3/15/2052 |
$ 121,780
|
|
90,000
|
|
Ameren
Corp., Sr. Unsecd. Note, 1.950%, 3/15/2027 |
88,731
|
|
70,000
|
|
Electricite
de France S.A., Note, 144A, 5.600%, 1/27/2040 |
67,595
|
|
300,000
|
|
Electricite
de France S.A., Sr. Unsecd. Note, 144A, 4.500%, 9/21/2028 |
298,510
|
|
140,000
|
|
Emera
US Finance LP, Sr. Unsecd. Note, 4.750%, 6/15/2046 |
114,730
|
|
65,000
|
|
Emera
US Finance, LLC, Sr. Unsecd. Note, 5.200%, 4/1/2033 |
63,752
|
|
25,000
|
|
National
Rural Utilities Cooperative Finance Corp., Sr. Unsecd. Note, Series MTNC, 8.000%, 3/1/2032 |
28,415
|
|
200,000
|
|
NextEra
Energy Capital Holdings, Inc., Sr. Unsecd. Note, 5.900%, 3/15/2055 |
187,075
|
|
500,000
|
|
Southwestern
Electric Power Co., Sr. Unsecd. Note, 5.200%, 4/1/2036 |
483,409
|
|
250,000
|
|
Virginia
Electric & Power Co., Sr. Unsecd. Note, 5.450%, 4/1/2053 |
226,028
|
|
103,000
|
|
WEC
Energy Group, Inc., Sr. Unsecd. Note, 1.800%, 10/15/2030 |
90,975
|
|
170,000
|
|
WEC
Energy Group, Inc., Sr. Unsecd. Note, 5.150%, 10/1/2027 |
171,063
|
|
|
|
TOTAL
|
1,942,063
|
|
|
|
Utility
- Natural Gas Distributor—0.1% |
|
|
300,000
|
|
Southern
California Gas Co., Term Loan - 1st Lien, 5.450%, 6/15/2035 |
301,214
|
|
|
|
Utility
- Other—0.0% |
|
|
125,000
|
|
National
Grid-SP PLC, Sr. Unsecd. Note, 5.602%, 6/12/2028 |
127,095
|
|
|
|
TOTAL
CORPORATE BONDS
(IDENTIFIED
COST $31,821,761) |
30,412,938
|
|
|
|
EXCHANGE-TRADED
FUNDS—5.6% |
|
|
61,200
|
|
iShares
Core MSCI Emerging Markets ETF |
4,749,732
|
|
129,800
|
|
iShares
MSCI EAFE ETF |
13,704,284
|
|
|
|
Total
Exchange-Traded Funds
(IDENTIFIED
COST $14,498,196) |
18,454,016
|
|
|
|
U.S.
TREASURIES—5.1% |
|
|
|
|
Treasury
Inflation-Indexed Note—0.3% |
|
|
$1,201,311
|
|
U.S.
Treasury Inflation-Protected Notes, 0.750%, 7/15/2028 |
1,170,143
|
|
|
|
U.S.
Treasury Bond—0.4% |
|
|
340,000
|
|
United
States Treasury Bond, 2.250%, 2/15/2052 |
193,999
|
|
125,000
|
|
United
States Treasury Bond, 3.000%, 8/15/2052 |
84,180
|
|
50,000
|
|
United
States Treasury Bond, 3.250%, 5/15/2042 |
39,609
|
|
150,000
|
|
United
States Treasury Bond, 4.125%, 8/15/2053 |
124,734
|
|
475,000
|
|
United
States Treasury Bond, 4.250%, 8/15/2054 |
403,453
|
|
160,000
|
|
United
States Treasury Bond, 4.500%, 11/15/2054 |
141,750
|
|
50,000
|
|
United
States Treasury Bond, 4.625%, 2/15/2055 |
45,226
|
|
150,000
|
|
United
States Treasury Bond, 4.625%, 11/15/2055 |
135,750
|
|
100,000
|
|
United
States Treasury Bond, 4.750%, 8/15/2055 |
92,344
|
|
|
|
TOTAL
|
1,261,045
|
|
|
|
U.S.
Treasury Note—4.4% |
|
|
500,000
|
|
United
States Treasury Note, 2.375%, 3/31/2029 |
475,692
|
|
500,000
|
|
United
States Treasury Note, 2.750%, 5/31/2029 |
479,194
|
|
550,000
|
|
United
States Treasury Note, 3.125%, 8/31/2029 |
530,840
|
|
400,000
|
|
United
States Treasury Note, 3.500%, 10/31/2027 |
396,527
|
|
600,000
|
|
United
States Treasury Note, 3.500%, 3/15/2029 |
587,940
|
|
300,000
|
|
United
States Treasury Note, 3.625%, 8/31/2030 |
291,383
|
|
300,000
|
|
United
States Treasury Note, 3.625%, 10/31/2030 |
291,007
|
|
300,000
|
|
United
States Treasury Note, 3.750%, 10/31/2032 |
287,507
|
|
200,000
|
|
United
States Treasury Note, 3.750%, 2/28/2033 |
191,129
|
|
700,000
|
|
United
States Treasury Note, 3.875%, 12/31/2027 |
696,456
|
|
150,000
|
|
United
States Treasury Note, 3.875%, 6/15/2028 |
148,930
|
|
300,000
|
|
United
States Treasury Note, 3.875%, 5/15/2029 |
296,506
|
|
920,000
|
|
United
States Treasury Note, 3.875%, 6/30/2030 |
903,100
|
|
475,000
|
|
United
States Treasury Note, 4.000%, 5/31/2028 |
472,790
|
Annual
Financial Statements and Additional Information
10
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
U.S.
TREASURIES—continued
|
|
|
|
|
U.S.
Treasury Note—continued |
|
|
$ 200,000
|
|
United
States Treasury Note, 4.000%, 2/28/2030 |
$ 197,580
|
|
525,000
|
|
United
States Treasury Note, 4.000%, 3/31/2030 |
518,398
|
|
100,000
|
|
United
States Treasury Note, 4.000%, 7/31/2030 |
98,571
|
|
175,000
|
|
United
States Treasury Note, 4.000%, 6/30/2032 |
170,555
|
|
1,600,000
|
|
United
States Treasury Note, 4.125%, 6/30/2028 |
1,595,872
|
|
295,000
|
|
United
States Treasury Note, 4.125%, 7/31/2028 |
294,147
|
|
2,200,000
|
|
United
States Treasury Note, 4.125%, 6/15/2029 |
2,188,053
|
|
1,675,000
|
3
|
United
States Treasury Note, 4.125%, 10/31/2029 |
1,663,424
|
|
450,000
|
|
United
States Treasury Note, 4.125%, 2/29/2032 |
442,422
|
|
350,000
|
|
United
States Treasury Note, 4.375%, 11/30/2030 |
349,481
|
|
200,000
|
|
United
States Treasury Note, 4.375%, 5/15/2036 |
194,782
|
|
650,000
|
|
United
States Treasury Note, 4.500%, 12/31/2031 |
651,218
|
|
|
|
TOTAL
|
14,413,504
|
|
|
|
TOTAL
U.S. TREASURIES
(IDENTIFIED
COST $17,259,904) |
16,844,692
|
|
|
|
ASSET-BACKED
SECURITIES—2.5% |
|
|
|
|
Auto
Receivables—1.3% |
|
|
300,000
|
|
AmeriCredit
Automobile Receivables Trust 2025-1, Class A3, 4.120%, 5/20/2030 |
298,786
|
|
285,000
|
|
BMW
Vehicle Lease Trust 2024-2, Class A4, 4.210%, 2/25/2028 |
284,964
|
|
113,666
|
|
Citizens
Auto Receivables Trust 2024-2, Class A3, 5.330%, 8/15/2028 |
114,123
|
|
300,000
|
|
Ford
Credit Auto Owner Trust/Ford Credit 2023-2, Class SUB, 5.920%, 2/15/2036 |
306,401
|
|
250,000
|
|
Ford
Credit Floorplan Master Owner Trust 2026-2, Class A, 4.600%, 5/15/2033 |
248,289
|
|
300,000
|
|
General
Motors 2024-2A, Class B, 5.350%, 3/15/2031 |
297,288
|
|
250,000
|
|
General
Motors 2026, Class B, 5.010%, 5/16/2033 |
247,565
|
|
129,683
|
|
Huntington
Auto Trust 2024-1A, Class A3, 5.230%, 1/16/2029 |
130,294
|
|
150,000
|
|
LAD
Auto Receivables Trust 2025-2A, Class C, 4.700%, 8/16/2032 |
149,034
|
|
97,404
|
|
M&T
Bank Auto Receivables Trust 2024-1A, Class A3, 5.220%, 2/17/2032 |
98,004
|
|
174,919
|
|
Santander
Drive Auto Receivables Trust 2023-1, Class C, 5.090%, 5/15/2030 |
175,605
|
|
242,481
|
|
Santander
Drive Auto Receivables Trust 2023-3, Class C, 5.770%, 11/15/2030 |
244,629
|
|
133,331
|
|
Securitized
Term Auto Receivables Trust 2025-A, Class B, 5.038%, 7/25/2031 |
134,039
|
|
225,000
|
|
SFS
Auto Receivables Securitization Trust 2023-1A, Class C, 5.970%, 2/20/2031 |
228,229
|
|
250,000
|
|
Stellantis
Financial Underwritten Enhanced Lease Trust 2025-AA, Class A4, 4.500%, 3/20/2029 |
250,273
|
|
250,000
|
|
Toyota
Auto Loan Extended Note 2023-1A, Class A, 4.930%, 6/25/2036 |
251,714
|
|
243,772
|
|
Truist
Bank Auto Credit-Linked Notes Series 2025-1, Class B, 4.728%, 9/26/2033 |
243,232
|
|
300,000
|
|
Wheels
Fleet Lease Funding LLC 2026-1, Class A3, 4.390%, 4/18/2039 |
297,169
|
|
200,000
|
|
Yamaha
Motor Master Trust 2026 A1, Class A1, 4.430%, 4/15/2031 |
198,496
|
|
|
|
TOTAL
|
4,198,134
|
|
|
|
Credit
Card—0.1% |
|
|
400,000
|
|
Master
Credit Card Trust 2022-2A, Class C, 2.730%, 7/21/2028 |
394,389
|
|
|
|
Equipment
Lease—0.8% |
|
|
185,000
|
|
Dell
Equipment Finance Trust 2025-1, Class A3, 4.610%, 2/24/2031 |
185,461
|
|
375,000
|
|
Dell
Equipment Finance Trust 2025-2, Class C, 4.530%, 3/24/2031 |
373,304
|
|
300,000
|
|
DLLAA
LLC 2025-1A, Class A4, 5.080%, 4/20/2033 |
301,407
|
|
300,000
|
|
DLLAD
LLC 2024-1A, Class A4, 5.380%, 9/22/2031 |
304,348
|
|
200,000
|
|
DLLMT
LLC 2023-1A, Class A4, 5.350%, 3/20/2031 |
200,540
|
|
280,000
|
|
Great
America Leasing Receivables 2025-1, Class A4, 4.580%, 1/15/2032 |
278,418
|
|
400,000
|
|
HPEFS
Equipment Trust 2024-2A, Class C, 5.520%, 10/20/2031 |
402,556
|
|
300,000
|
|
Kubota
Credit Owner Trust 2023-2A, Class A4, 5.230%, 6/15/2028 |
301,460
|
|
300,000
|
|
MMAF
Equipment Finance LLC 2023-A, Class A4, 5.500%, 12/13/2038 |
303,250
|
|
|
|
TOTAL
|
2,650,744
|
|
|
|
Other—0.3%
|
|
|
300,000
|
|
PFS
Financing Corp. 2024-F, Class A, 4.750%, 8/15/2029 |
301,571
|
|
225,000
|
|
PFS
Financing Corp. 2025-D, Class A, 4.470%, 5/15/2030 |
224,841
|
Annual
Financial Statements and Additional Information
11
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
ASSET-BACKED
SECURITIES—continued
|
|
|
|
|
Other—continued
|
|
|
$ 200,000
|
|
PFS
Financing Corp. 2025-F, Class A, 4.400%, 8/15/2030 |
$ 199,380
|
|
250,000
|
|
PFS
Financing Corp. 2026-D, Class A, 4.490%, 5/15/2031 |
248,983
|
|
|
|
TOTAL
|
974,775
|
|
|
|
Student
Loans—0.0% |
|
|
95,871
|
|
Navient
Student Loan Trust 2021-A, Class A, 0.840%, 5/15/2069 |
87,953
|
|
|
|
TOTAL
ASSET-BACKED SECURITIES
(IDENTIFIED
COST $8,304,714) |
8,305,995
|
|
|
|
COLLATERALIZED
MORTGAGE OBLIGATIONS—1.6% |
|
|
|
|
Federal
Home Loan Mortgage Corporation—0.6% |
|
|
849
|
|
Federal
Home Loan Mortgage Corp. REMIC, Series 2497, Class JH, 6.000%, 9/15/2032 |
869
|
|
131,216
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5396, Class FG, 4.616% (30-DAY AVERAGE SOFR +1.000%), 4/25/2054 |
131,233
|
|
195,179
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5402, Class FB, 4.716% (30-DAY AVERAGE SOFR +1.100%), 4/25/2054 |
195,956
|
|
107,918
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5417, Class FC, 4.816% (30-DAY AVERAGE SOFR +1.200%), 6/25/2054 |
108,403
|
|
77,743
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5426, Class FB, 4.816% (30-DAY AVERAGE SOFR +1.200%), 6/25/2054 |
78,030
|
|
267,962
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5440, Class WF, 4.766% (30-DAY AVERAGE SOFR +1.150%), 8/25/2054 |
269,662
|
|
130,830
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5484, Class FB, 4.816% (30-DAY AVERAGE SOFR +1.200%), 12/25/2054 |
131,169
|
|
102,599
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5499, Class FN, 4.616% (30-DAY AVERAGE SOFR +1.000%), 2/25/2055 |
101,991
|
|
247,655
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5511, Class JF, 4.766% (30-DAY AVERAGE SOFR +1.150%), 3/25/2055 |
247,486
|
|
494,900
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series 5522, Class BF, 4.666% (30-DAY AVERAGE SOFR +1.050%), 3/25/2055 |
497,189
|
|
250,000
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series KF171, Class AS, 4.191% (30-DAY AVERAGE SOFR +0.560%), 3/25/2036 |
249,922
|
|
|
|
TOTAL
|
2,011,910
|
|
|
|
Federal
National Mortgage Association—0.4% |
|
|
7
|
|
Federal
National Mortgage Association REMIC, Series 2003-35, Class UC, 3.750%, 5/25/2033 |
7
|
|
444,129
|
2
|
Federal
National Mortgage Association REMIC, Series 2024-75, Class FC, 4.566% (30-DAY AVERAGE SOFR
+0.950%),
10/25/2054 |
446,371
|
|
253,656
|
2
|
Federal
National Mortgage Association REMIC, Series 2024-82, Class HF, 4.816% (30-DAY AVERAGE SOFR
+1.200%),
11/25/2054 |
256,353
|
|
248,878
|
2
|
Federal
National Mortgage Association REMIC, Series 2025-18, Class WF, 4.716% (30-DAY AVERAGE SOFR
+1.100%),
9/25/2054 |
250,356
|
|
195,969
|
2
|
Federal
National Mortgage Association REMIC, Series 2026-38, Class AF, 4.366% (30-DAY AVERAGE SOFR
+0.750%),
6/25/2056 |
195,610
|
|
|
|
TOTAL
|
1,148,697
|
|
|
|
Government
National Mortgage Association—0.5% |
|
|
346,688
|
2
|
Government
National Mortgage Association REMIC, Series 2023-65, Class FQ, 4.521% (30-DAY AVERAGE SOFR
+0.900%),
5/20/2053 |
348,363
|
|
297,564
|
2
|
Government
National Mortgage Association REMIC, Series 2023-83, Class DF, 4.601% (30-DAY AVERAGE SOFR
+0.980%),
6/20/2053 |
299,799
|
|
430,901
|
2
|
Government
National Mortgage Association REMIC, Series 2024-71, Class AF, 4.621% (30-DAY AVERAGE SOFR
+1.000%),
4/20/2054 |
429,374
|
|
665,028
|
2
|
Government
National Mortgage Association REMIC, Series 2025-169, Class AF, 4.621% (30-DAY AVERAGE SOFR
+1.000%),
10/20/2055 |
669,754
|
|
|
|
TOTAL
|
1,747,290
|
|
|
|
Non-Agency
Mortgage—0.1% |
|
|
312,741
|
|
GS
Mortgage-Backed Securities Trust 2023-PJ1, Class A4, 3.500%, 2/25/2053 |
273,135
|
|
|
|
TOTAL
COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED
COST $5,175,538) |
5,181,032
|
|
|
|
COMMERCIAL
MORTGAGE-BACKED SECURITIES—1.4% |
|
|
|
|
Commercial
Mortgage—1.0% |
|
|
150,000
|
|
Bank
2023-BNK46, Class A4, 5.745%, 8/15/2056 |
153,946
|
|
282,422
|
|
Bank
2024-BNK48, Class A4, 4.775%, 10/15/2057 |
275,264
|
|
248,029
|
|
Barclays
Commercial Mortgage S 2024-5C27, Class A2, 5.550%, 7/15/2057 |
250,758
|
|
250,000
|
|
Barclays
Commercial Mortgage S 2025-C35, Class A4, 5.289%, 7/15/2058 |
247,619
|
|
400,000
|
|
Barclays
Commercial Mortgage S 2026-5C42, Class A2, 5.114%, 7/15/2033 |
399,678
|
|
350,000
|
|
Benchmark
Mortgage Trust 2026, Class A2, 4.984%, 5/15/2059 |
347,459
|
|
200,000
|
|
BMO
Mortgage Trust 2023-5C1, Class A3, 6.534%, 8/15/2056 |
204,550
|
Annual
Financial Statements and Additional Information
12
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
COMMERCIAL
MORTGAGE-BACKED SECURITIES—continued
|
|
|
|
|
Commercial
Mortgage—continued |
|
|
$ 200,000
|
|
BMO
Mortgage Trust 2023-C4, Class A5, 5.116%, 2/15/2056 |
$ 198,384
|
|
300,000
|
|
BMO
Mortgage Trust 2025-5C11, Class A2, 5.187%, 7/15/2058 |
299,367
|
|
350,000
|
|
BMO
Mortgage Trust 2025-5C12, Class A2, 4.698%, 10/15/2058 |
344,004
|
|
250,000
|
2
|
JW
Commercial Mortgage Trust 2 2024-BERY, Class A, 5.269% (CME Term SOFR 1 Month +1.593%), 11/15/2039 |
250,312
|
|
225,000
|
2
|
ORL
Trust 2024-GLKS, Class A, 5.168% (CME Term SOFR 1 Month +1.492%), 12/15/2039 |
225,281
|
|
225,000
|
|
Wells
Fargo Commercial Mortgage Trust 2024-5C2, Class A2, 5.439%, 11/15/2057 |
226,281
|
|
|
|
TOTAL
|
3,422,903
|
|
|
|
Federal
Home Loan Mortgage Corporation—0.4% |
|
|
164,775
|
|
Federal
Home Loan Mortgage Corp. REMIC, Series K106, Class A1, 1.783%, 10/25/2029 |
156,705
|
|
250,000
|
|
Federal
Home Loan Mortgage Corp. REMIC, Series K161, Class A2, 4.900%, 10/25/2033 |
250,202
|
|
235,972
|
|
Federal
Home Loan Mortgage Corp. REMIC, Series K737, Class A2, 2.525%, 10/25/2026 |
235,048
|
|
200,000
|
|
Federal
Home Loan Mortgage Corp. REMIC, Series K754, Class A2, 4.940%, 11/25/2030 |
201,685
|
|
300,000
|
2
|
Federal
Home Loan Mortgage Corp. REMIC, Series KF172, Class AS, 4.191% (30-DAY AVERAGE SOFR +0.560%), 4/25/2036 |
299,907
|
|
|
|
TOTAL
|
1,143,547
|
|
|
|
TOTAL
COMMERCIAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED
COST $4,625,108) |
4,566,450
|
|
|
|
MORTGAGE-BACKED
SECURITIES—0.1% |
|
|
|
|
Federal
Home Loan Mortgage Corporation—0.0% |
|
|
14,922
|
|
Federal
Home Loan Mortgage Corp., Pool G07801, 4.000%, 10/1/2044 |
14,201
|
|
|
|
Federal
National Mortgage Association—0.1% |
|
|
3,465
|
|
Federal
National Mortgage Association, Pool 357761, 5.500%, 5/1/2035 |
3,511
|
|
335
|
|
Federal
National Mortgage Association, Pool 728709, 5.500%, 7/1/2033 |
339
|
|
15,319
|
|
Federal
National Mortgage Association, Pool 932864, 4.000%, 12/1/2040 |
14,663
|
|
26,233
|
|
Federal
National Mortgage Association, Pool AB7859, 3.500%, 2/1/2043 |
24,275
|
|
18,868
|
|
Federal
National Mortgage Association, Pool AD6938, 4.500%, 6/1/2040 |
18,523
|
|
9,682
|
|
Federal
National Mortgage Association, Pool AQ0945, 3.000%, 11/1/2042 |
8,705
|
|
11,889
|
|
Federal
National Mortgage Association, Pool AT2127, 3.000%, 4/1/2043 |
10,683
|
|
1,699
|
|
Federal
National Mortgage Association, Pool AT7861, 3.000%, 6/1/2028 |
1,678
|
|
10,425
|
|
Federal
National Mortgage Association, Pool BM4388, 4.000%, 8/1/2048 |
9,685
|
|
6,313
|
|
Federal
National Mortgage Association, Pool BM5024, 3.000%, 11/1/2048 |
5,509
|
|
8,037
|
|
Federal
National Mortgage Association, Pool BM5246, 3.500%, 11/1/2048 |
7,247
|
|
10,682
|
|
Federal
National Mortgage Association, Pool CA0833, 3.500%, 12/1/2047 |
9,639
|
|
7,705
|
|
Federal
National Mortgage Association, Pool CA4427, 3.000%, 10/1/2049 |
6,672
|
|
5,109
|
|
Federal
National Mortgage Association, Pool FM0008, 3.500%, 8/1/2049 |
4,594
|
|
16,429
|
|
Federal
National Mortgage Association, Pool FM1000, 3.000%, 4/1/2047 |
14,386
|
|
7,638
|
|
Federal
National Mortgage Association, Pool FM1221, 3.500%, 7/1/2049 |
6,876
|
|
10,393
|
|
Federal
National Mortgage Association, Pool MA0500, 5.000%, 8/1/2040 |
10,355
|
|
12,447
|
|
Federal
National Mortgage Association, Pool MA0666, 4.500%, 3/1/2041 |
12,201
|
|
16,356
|
|
Federal
National Mortgage Association, Pool MA1430, 3.000%, 5/1/2043 |
14,679
|
|
10,578
|
|
Federal
National Mortgage Association, Pool MA2803, 2.500%, 11/1/2031 |
10,143
|
|
|
|
TOTAL
|
194,363
|
|
|
|
Government
National Mortgage Association—0.0% |
|
|
9,150
|
|
Government
National Mortgage Association, Pool MA0625, 3.500%, 12/20/2042 |
8,491
|
|
5,802
|
|
Government
National Mortgage Association, Pool MA1376, 4.000%, 10/20/2043 |
5,493
|
|
|
|
TOTAL
|
13,984
|
|
|
|
TOTAL
MORTGAGE-BACKED SECURITIES
(IDENTIFIED
COST $244,581) |
222,548
|
|
|
|
MUNICIPAL
BOND—0.0% |
|
|
30,000
|
|
Texas
State Transportation Commission - State Highway Fund, 5.178%, 4/1/2030
(IDENTIFIED
COST $31,623) |
30,284
|
|
|
|
INVESTMENT
COMPANIES—13.7% |
|
|
15,327
|
|
Bank
Loan Core Fund |
128,288
|
|
356,496
|
|
Emerging
Markets Core Fund |
3,222,727
|
Annual
Financial Statements and Additional Information
13
|
Shares
or
Principal
Amount
|
|
|
Value
|
|
|
|
INVESTMENT
COMPANIES—continued
|
|
|
6,010,397
|
|
Federated
Hermes Government Obligations Fund, Premier Shares, 3.57%4
|
$ 6,010,397
|
|
493,011
|
|
High
Yield Bond Core Fund |
2,765,793
|
|
2,793,291
|
|
Mortgage
Core Fund |
22,960,849
|
|
1,134,687
|
|
Project
and Trade Finance Core Fund |
10,166,799
|
|
|
|
TOTAL
INVESTMENT COMPANIES
(IDENTIFIED
COST $46,086,396) |
45,254,853
|
|
|
|
TOTAL
INVESTMENT IN SECURITIES—99.9%
(IDENTIFIED
COST $281,025,701)5
|
329,799,921
|
|
|
|
OTHER
ASSETS AND LIABILITIES - NET—0.1%6
|
386,719
|
|
|
|
NET
ASSETS—100% |
$330,186,640
|
At July 31, 2026, the Fund had the following
outstanding futures contracts:
|
Description
|
Number
of
Contracts
|
Notional
Value
|
Expiration
Date
|
Value
and
Unrealized
(Depreciation)
|
|
Long
Futures: |
|
|
|
|
|
United
States Treasury Long Bond Long Futures |
1
|
$108,313
|
September
2026 |
$(3,250)
|
|
United
States Treasury Notes 2-Year Long Futures |
40
|
$8,224,375
|
September
2026 |
$(23,322)
|
|
United
States Treasury Notes 5-Year Long Futures |
55
|
$5,828,711
|
September
2026 |
$(44,254)
|
|
United
States Treasury Notes 10-Year Long Futures |
9
|
$972,000
|
September
2026 |
$(8,599)
|
|
United
States Treasury Notes 10-Year Ultra Long Futures |
35
|
$3,839,609
|
September
2026 |
$(71,055)
|
|
United
States Treasury Ultra Bond Long Futures |
42
|
$4,606,875
|
September
2026 |
$(168,593)
|
|
NET
UNREALIZED DEPRECIATION ON FUTURES CONTRACTS |
$(319,073)
| |||
Net Unrealized Depreciation on Futures Contracts
is included in “Other Assets and Liabilities—Net.”
An affiliated company is a company in which
the Fund, alone or in combination with other Federated Hermes funds, has ownership of at least
5% of the voting shares. Transactions with the affiliated companies during the period ended July 31, 2026, were as follows:
|
Affiliated
|
Value
as of
7/31/2025
|
Purchases
at
Cost |
Proceeds
from
Sales |
Change
in
Unrealized
Appreciation/
(Depreciation)
|
Net
Realized
Gain/
(Loss)
|
Value
as of
7/31/2026
|
Shares
Held
as of
7/31/2026
|
Dividend
Income
|
|
Consumer
Discretionary: |
|
|
|
|
|
|
|
|
|
Advance
Auto Parts, Inc. |
$2,419,143
|
$—
|
$(532,442)
|
$10,278
|
$102,406
|
$1,999,385
|
35,999
|
$41,725
|
Transactions with affiliated investment
companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period
ended July 31, 2026, were as follows:
|
Affiliates
|
Value
as of
7/31/2025
|
Purchases
at
Cost |
Proceeds
from
Sales |
Change
in
Unrealized
Appreciation/
Depreciation
|
Net
Realized
Gain/
(Loss)
|
Value
as of
7/31/2026
|
Shares
Held
as of
7/31/2026
|
Dividend
Income
|
|
Bank
Loan Core Fund |
$2,754,459
|
$218,713
|
$(2,817,000)
|
$(610)
|
$(27,274)
|
$128,288
|
15,327
|
$68,713
|
|
Emerging
Markets Core Fund |
$3,284,591
|
$525,015
|
$(630,000)
|
$(4,798)
|
$47,919
|
$3,222,727
|
356,496
|
$264,369
|
|
Federated
Hermes Government Obligations Fund,
Premier
Shares* |
$8,948,486
|
$69,980,515
|
$(72,918,604)
|
$—
|
$—
|
$6,010,397
|
6,010,397
|
$305,929
|
|
High
Yield Bond Core Fund |
$2,641,252
|
$431,959
|
$(264,000)
|
$(39,181)
|
$(4,237)
|
$2,765,793
|
493,011
|
$180,558
|
|
Mortgage
Core Fund |
$21,002,335
|
$3,075,387
|
$(980,000)
|
$49,591
|
$(186,464)
|
$22,960,849
|
2,793,291
|
$1,119,788
|
|
Project
and Trade Finance Core Fund |
$7,796,906
|
$2,326,547
|
$—
|
$43,346
|
$—
|
$10,166,799
|
1,134,687
|
$591,547
|
|
TOTAL
OF AFFILIATED TRANSACTIONS |
$46,428,029
|
$76,558,136
|
$(77,609,604)
|
$48,348
|
$(170,056)
|
$45,254,853
|
10,803,209
|
$2,530,904
|
|
*
|
All
or a portion of the balance/activity for the fund relates to cash collateral received on securities lending transactions.
|
|
1
|
Non-income-producing
security. |
|
2
|
Floating/variable
note with current rate and current maturity or next reset date shown. |
|
3
|
All
or a portion of this security is pledged as collateral to ensure the Fund is able to satisfy the obligations of its outstanding futures
contracts. |
|
4
|
7-day
net yield. |
|
5
|
The
cost of investments for federal tax purposes amounts to $283,153,015. |
|
6
|
Assets,
other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Annual
Financial Statements and Additional Information
14
Note: The categories
of investments are shown as a percentage of net assets at July 31, 2026.
Various inputs are used in determining the
value of the Fund’s investments. These inputs are summarized in the three broad levels listed
below:
Level 1—quoted prices in active markets
for identical securities.
Level 2—other significant observable
inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs
(including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing
securities are not an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used, as of July 31, 2026, in valuing the Fund’s assets carried at fair value:
|
Valuation
Inputs | ||||
|
|
Level
1—
Quoted
Prices
|
Level
2—
Other
Significant
Observable
Inputs
|
Level
3—
Significant
Unobservable
Inputs
|
Total
|
|
Equity
Securities: |
|
|
|
|
|
Common
Stocks |
|
|
|
|
|
Domestic
|
$199,209,122
|
$—
|
$—
|
$199,209,122
|
|
International
|
1,317,991
|
—
|
—
|
1,317,991
|
|
Debt
Securities: |
|
|
|
|
|
Corporate
Bonds |
—
|
30,412,938
|
—
|
30,412,938
|
|
U.S.
Treasuries |
—
|
16,844,692
|
—
|
16,844,692
|
|
Asset-Backed
Securities |
—
|
8,305,995
|
—
|
8,305,995
|
|
Collateralized
Mortgage Obligations |
—
|
5,181,032
|
—
|
5,181,032
|
|
Commercial
Mortgage-Backed Securities |
—
|
4,566,450
|
—
|
4,566,450
|
|
Mortgage-Backed
Securities |
—
|
222,548
|
—
|
222,548
|
|
Municipal
Bond |
—
|
30,284
|
—
|
30,284
|
|
Exchange-Traded
Funds |
18,454,016
|
—
|
—
|
18,454,016
|
|
Investment
Companies |
35,088,054
|
—
|
—
|
35,088,054
|
|
Other
Investments1
|
—
|
—
|
—
|
10,166,799
|
|
TOTAL
SECURITIES |
$254,069,183
|
$65,563,939
|
$—
|
$329,799,921
|
|
Other
Financial Instruments:2
|
|
|
|
|
|
Liabilities
|
$(319,073)
|
$—
|
$—
|
$(319,073)
|
|
1
|
As
permitted by U.S. generally accepted accounting principles (GAAP), an Investment Company valued at $10,166,799 is measured at fair value
using the net
asset
value (NAV) per share practical expedient and has not been categorized in the fair value hierarchy chart above. The price of shares redeemed
of Project and
Trade
Finance Core Fund (PTCORE), a portfolio of Federated Hermes Core Trust III, may be determined as of the closing NAV of the fund up to
twenty-four days
after
receipt of a shareholder redemption request. The investment objective of PTCORE is to provide total return. Copies of the PTCORE financial
statements are
available
on the EDGAR database on the SEC’s website or upon request from the Fund. |
|
2
|
Other
financial instruments are futures contracts. |
|
The
following acronym(s) are used throughout this portfolio: |
| |
|
ETF
|
—Exchange-Traded
Fund | |
|
GMTN
|
—Global
Medium Term Note | |
|
MTN
|
—Medium
Term Note | |
|
REIT
|
—Real
Estate Investment Trust | |
|
REMIC
|
—Real
Estate Mortgage Investment Conduit | |
|
SOFR
|
—Secured
Overnight Financing Rate | |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
15
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$22.97
|
$22.38
|
$19.51
|
$19.57
|
$23.18
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.32
|
0.33
|
0.30
|
0.28
|
0.16
|
|
Net
realized and unrealized gain (loss) |
2.22
|
2.53
|
2.86
|
0.85
|
(1.60)
|
|
Total
From Investment Operations |
2.54
|
2.86
|
3.16
|
1.13
|
(1.44)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.28)
|
(0.31)
|
(0.29)
|
(0.09)
|
(0.13)
|
|
Distributions
from net realized gain |
(1.65)
|
(1.96)
|
—
|
(1.10)
|
(2.04)
|
|
Total
Distributions |
(1.93)
|
(2.27)
|
(0.29)
|
(1.19)
|
(2.17)
|
|
Net
Asset Value, End of Period |
$23.58
|
$22.97
|
$22.38
|
$19.51
|
$19.57
|
|
Total
Return2
|
11.57%
|
13.31%
|
16.36%
|
6.28%
|
(7.05)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.28%
|
1.30%
|
1.31%
|
1.31%
|
1.30%
|
|
Net
investment income |
1.37%
|
1.47%
|
1.46%
|
1.48%
|
0.73%
|
|
Expense
waiver/reimbursement4
|
0.00%5
|
0.00%5
|
0.01%
|
0.04%
|
0.01%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$166,858
|
$151,074
|
$130,833
|
$115,519
|
$114,889
|
|
Portfolio
turnover6
|
63%
|
82%
|
68%
|
104%
|
110%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Represents
less than 0.01%. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
16
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$22.31
|
$21.81
|
$19.02
|
$19.16
|
$22.78
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.13
|
0.15
|
0.14
|
0.14
|
(0.01)
|
|
Net
realized and unrealized gain (loss) |
2.16
|
2.46
|
2.78
|
0.82
|
(1.57)
|
|
Total
From Investment Operations |
2.29
|
2.61
|
2.92
|
0.96
|
(1.58)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.14)
|
(0.15)
|
(0.13)
|
—
|
—
|
|
Distributions
from net realized gain |
(1.65)
|
(1.96)
|
—
|
(1.10)
|
(2.04)
|
|
Total
Distributions |
(1.79)
|
(2.11)
|
(0.13)
|
(1.10)
|
(2.04)
|
|
Net
Asset Value, End of Period |
$22.81
|
$22.31
|
$21.81
|
$19.02
|
$19.16
|
|
Total
Return2
|
10.69%
|
12.44%
|
15.46%
|
5.45%
|
(7.76)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
2.06%
|
2.08%
|
2.08%
|
2.10%
|
2.06%
|
|
Net
investment income (loss) |
0.59%
|
0.69%
|
0.70%
|
0.69%
|
(0.05)%
|
|
Expense
waiver/reimbursement4
|
0.00%5
|
0.00%5
|
0.00%5
|
0.01%
|
0.01%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$18,122
|
$15,267
|
$12,272
|
$11,890
|
$13,503
|
|
Portfolio
turnover6
|
63%
|
82%
|
68%
|
104%
|
110%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Represents
less than 0.01%. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
17
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$23.08
|
$22.47
|
$19.62
|
$19.67
|
$23.28
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.37
|
0.38
|
0.35
|
0.33
|
0.21
|
|
Net
realized and unrealized gain (loss) |
2.23
|
2.55
|
2.87
|
0.86
|
(1.60)
|
|
Total
From Investment Operations |
2.60
|
2.93
|
3.22
|
1.19
|
(1.39)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.33)
|
(0.36)
|
(0.37)
|
(0.14)
|
(0.18)
|
|
Distributions
from net realized gain |
(1.65)
|
(1.96)
|
—
|
(1.10)
|
(2.04)
|
|
Total
Distributions |
(1.98)
|
(2.32)
|
(0.37)
|
(1.24)
|
(2.22)
|
|
Net
Asset Value, End of Period |
$23.70
|
$23.08
|
$22.47
|
$19.62
|
$19.67
|
|
Total
Return2
|
11.79%
|
13.60%
|
16.62%
|
6.57%
|
(6.82)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.06%
|
1.06%
|
1.06%
|
1.06%
|
1.06%
|
|
Net
investment income |
1.59%
|
1.71%
|
1.72%
|
1.74%
|
0.97%
|
|
Expense
waiver/reimbursement4
|
0.00%5
|
0.02%
|
0.02%
|
0.04%
|
0.01%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$126,994
|
$99,413
|
$81,187
|
$69,433
|
$65,157
|
|
Portfolio
turnover6
|
63%
|
82%
|
68%
|
104%
|
110%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Represents
less than 0.01%. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
18
Financial
Highlights–Class
R6 Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$23.01
|
$22.40
|
$19.56
|
$19.63
|
$23.24
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.38
|
0.39
|
0.36
|
0.32
|
0.22
|
|
Net
realized and unrealized gain (loss) |
2.23
|
2.55
|
2.85
|
0.87
|
(1.61)
|
|
Total
From Investment Operations |
2.61
|
2.94
|
3.21
|
1.19
|
(1.39)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.34)
|
(0.37)
|
(0.37)
|
(0.16)
|
(0.18)
|
|
Distributions
from net realized gain |
(1.65)
|
(1.96)
|
—
|
(1.10)
|
(2.04)
|
|
Total
Distributions |
(1.99)
|
(2.33)
|
(0.37)
|
(1.26)
|
(2.22)
|
|
Net
Asset Value, End of Period |
$23.63
|
$23.01
|
$22.40
|
$19.56
|
$19.63
|
|
Total
Return2
|
11.87%
|
13.70%
|
16.66%
|
6.59%
|
(6.81)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.99%
|
1.02%
|
1.02%
|
1.04%
|
1.01%
|
|
Net
investment income |
1.67%
|
1.77%
|
1.75%
|
1.76%
|
1.05%
|
|
Expense
waiver/reimbursement4
|
0.00%5
|
0.00%5
|
0.00%5
|
0.01%
|
0.01%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$18,213
|
$15,769
|
$3,279
|
$2,648
|
$2,286
|
|
Portfolio
turnover6
|
63%
|
82%
|
68%
|
104%
|
110%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Represents
less than 0.01%. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
19
Statement
of Assets and Liabilities
July 31, 2026
|
Assets:
|
|
|
Investment
in securities, at value including $47,254,238 of investments in affiliated holdings* (identified
cost $281,025,701, including
$47,322,492
of identified cost in affiliated holdings) |
$329,799,921
|
|
Income
receivable |
830,530
|
|
Income
receivable from affiliated holdings |
16,221
|
|
Receivable
for investments sold |
1,321,768
|
|
Receivable
for shares sold |
201,865
|
|
Total
Assets |
332,170,305
|
|
Liabilities:
|
|
|
Payable
for investments purchased |
1,506,405
|
|
Payable
for shares redeemed |
41,035
|
|
Payable
for variation margin on futures contracts |
109,152
|
|
Payable
for investment adviser fee (Note 5)
|
6,756
|
|
Payable
for administrative fee (Note 5)
|
697
|
|
Payable
for Directors’/Trustees’ fees (Note 5)
|
549
|
|
Payable
for auditing fees |
41,903
|
|
Payable
for custodian fees |
17,477
|
|
Payable
for portfolio accounting fees |
82,464
|
|
Payable
for distribution services fee (Note 5)
|
11,465
|
|
Payable
for other service fees (Notes 2 and 5)
|
76,054
|
|
Accrued
expenses (Note 5)
|
89,708
|
|
Total
Liabilities |
1,983,665
|
|
Net
assets for 13,998,876 shares outstanding |
$330,186,640
|
|
Net Assets
Consist of: |
|
|
Paid-in
capital |
$270,775,251
|
|
Total
distributable earnings (loss) |
59,411,389
|
|
Net
Assets |
$330,186,640
|
|
Net Asset
Value, Offering Price and Redemption Proceeds Per Share: |
|
|
Class A
Shares: |
|
|
Net
asset value per share ($166,857,846 ÷ 7,076,093 shares outstanding), no par value, unlimited shares authorized |
$23.58
|
|
Offering
price per share (100/95.50 of $23.58) |
$24.69
|
|
Redemption
proceeds per share |
$23.58
|
|
Class C
Shares: |
|
|
Net
asset value per share ($18,121,853 ÷ 794,315 shares outstanding), no par value, unlimited shares authorized |
$22.81
|
|
Offering
price per share |
$22.81
|
|
Redemption
proceeds per share (99.00/100 of $22.81) |
$22.58
|
|
Institutional
Shares: |
|
|
Net
asset value per share ($126,993,973 ÷ 5,357,775 shares outstanding), no par value, unlimited shares authorized |
$23.70
|
|
Offering
price per share |
$23.70
|
|
Redemption
proceeds per share |
$23.70
|
|
Class R6
Shares: |
|
|
Net
asset value per share ($18,212,968 ÷ 770,693 shares outstanding), no par value, unlimited shares authorized |
$23.63
|
|
Offering
price per share |
$23.63
|
|
Redemption
proceeds per share |
$23.63
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
20
Statement
of Operations
Year Ended July 31,
2026
|
Investment
Income: |
|
|
Dividends
(including $2,567,878 received from affiliated holdings*) |
$5,321,773
|
|
Interest
|
2,917,362
|
|
Net
income on securities loaned (includes $4,751 earned from affiliated holdings related to cash collateral balances*) (Note 2)
|
3,965
|
|
TOTAL
INCOME |
8,243,100
|
|
Expenses:
|
|
|
Investment
adviser fee (Note 5)
|
2,332,532
|
|
Administrative
fee (Note 5)
|
249,121
|
|
Custodian
fees |
44,007
|
|
Transfer
agent fees (Note 2) |
258,847
|
|
Directors’/Trustees’
fees (Note 5)
|
3,022
|
|
Auditing
fees |
41,903
|
|
Legal
fees |
11,287
|
|
Portfolio
accounting fees |
138,682
|
|
Distribution
services fee (Note 5)
|
127,658
|
|
Other
service fees (Notes 2 and 5)
|
432,369
|
|
Share
registration costs |
105,709
|
|
Printing
and postage |
29,899
|
|
Miscellaneous
(Note 5)
|
29,771
|
|
TOTAL
EXPENSES |
3,804,807
|
|
Reimbursement
of investment adviser fee (Note 5) |
(5,660)
|
|
Net
expenses |
3,799,147
|
|
Net
investment income |
4,443,953
|
|
Realized
and Unrealized Gain (Loss) on Investments and Futures Contracts: |
|
|
Net
realized gain on investments (including net realized loss of $(67,650) on sales of investments in affiliated holdings*) |
14,944,772
|
|
Net
realized loss on futures contracts |
(351,142)
|
|
Net
change in unrealized appreciation of investments (including net change in unrealized depreciation of $58,626 on investments in affiliated
holdings*)
|
15,037,375
|
|
Net
change in unrealized depreciation of futures contracts |
(262,924)
|
|
Net
realized and unrealized gain (loss) on investments and futures contracts |
29,368,081
|
|
Change
in net assets resulting from operations |
$33,812,034
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
21
Statement
of Changes in Net Assets
|
Year
Ended July 31 |
2026
|
2025
|
|
Increase
(Decrease) in Net Assets |
|
|
|
Operations:
|
|
|
|
Net
investment income |
$4,443,953
|
$3,806,413
|
|
Net
realized gain (loss) |
14,593,630
|
23,320,533
|
|
Net
change in unrealized appreciation/depreciation |
14,774,451
|
4,617,900
|
|
CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS |
33,812,034
|
31,744,846
|
|
Distributions
to Shareholders: |
|
|
|
Class
A Shares |
(12,892,693)
|
(13,282,003)
|
|
Class
C Shares |
(1,296,405)
|
(1,193,607)
|
|
Institutional
Shares |
(9,577,043)
|
(9,038,895)
|
|
Class
R6 Shares |
(1,415,203)
|
(349,350)
|
|
CHANGE
IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
(25,181,344)
|
(23,863,855)
|
|
Share Transactions:
|
|
|
|
Proceeds
from sale of shares |
74,299,216
|
75,322,293
|
|
Net
asset value of shares issued to shareholders in payment of distributions declared |
24,826,474
|
23,238,496
|
|
Cost
of shares redeemed |
(59,094,349)
|
(52,487,147)
|
|
CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
40,031,341
|
46,073,642
|
|
Change
in net assets |
48,662,031
|
53,954,633
|
|
Net Assets:
|
|
|
|
Beginning
of period |
281,524,609
|
227,569,976
|
|
End
of period |
$330,186,640
|
$281,524,609
|
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
22
Notes to
Financial Statements
July 31, 2026
1. ORGANIZATION
Federated Hermes MDT Series (the “Trust”)
is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end
management investment company. The Trust consists of five portfolios. The financial statements included herein are only those of
Federated Hermes MDT Balanced Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated
and a shareholder’s interest is limited to the portfolio in which shares are
held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares. All shares of the Fund have equal rights
with respect to voting, except on class-specific matters. The investment objective
of the Fund is the possibility of long-term growth of capital and income.
2. SIGNIFICANT
ACCOUNTING POLICIES
The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its financial statements.
These policies are in conformity with GAAP.
Investment Valuation
In
calculating its NAV, the Fund generally values investments as follows:
■
Equity
securities and exchange-traded funds listed on an exchange or traded through a regulated market system are valued at their last
reported sale price or official closing price in their principal exchange or market.
■
Fixed-income
securities are fair valued using price evaluations provided by a pricing service approved by Federated MDTA LLC (the
“Adviser”).
■
Shares
of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share
practical expedient, as applicable.
■
Derivative
contracts listed on exchanges are valued at their reported settlement or closing price, except that options are valued at the mean
of closing bid and ask quotations.
■
Over-the-counter
(OTC) derivative contracts are fair valued using price evaluations provided by a pricing service approved by the
Adviser.
■
For
securities that are fair valued in accordance with procedures established by and under the general supervision of the Adviser, certain
factors may be considered, such as: the last traded or purchase price of the security, information obtained by contacting the issuer
or dealers, analysis of the issuer’s financial statements or other available documents, fundamental analytical data, the nature
and duration of restrictions on disposition, the movement of the
market in which the security is normally traded, public trading in similar securities
or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors including but not limited
to industry changes and relevant government actions.
If any price, quotation, price evaluation
or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain
price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth
in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion
of the Adviser’s valuation committee (“Valuation Committee”),
is deemed not representative of the fair value of such security, the Fund uses the
fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund
could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines
its NAV per share, and the actual value obtained could be materially different.
Fair Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Act, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s
valuation designee to perform any fair value determinations for
securities and other assets held by the Fund. The Adviser is subject to the Trustees’
oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the
Adviser’s fair value determinations.
The Adviser, acting through
its Valuation Committee, is responsible for determining the fair value of investments for which market quotations
are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated
companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use
pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The
Valuation Committee employs various methods for reviewing third-party
pricing-service evaluations including periodic reviews of third-party
pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional
back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on
recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee
determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review
the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant
events procedures as part of the Fund’s compliance program
and will review any changes made to the procedures.
Factors considered by
pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon,
maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers
and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an
investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price
between
Annual
Financial Statements and Additional Information
23
the prices bid and
ask for the investment (a “mid” evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities,
mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income
securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment,
the fair value of the investment is determined in accordance with procedures adopted by the Adviser.
The Adviser has also
adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines
that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment
would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both
an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying
the resulting change in value. Examples of significant events
that may occur after the close of the principal market on which a security is traded,
or after the time of a price evaluation provided by a pricing service or a dealer, include:
■
With
respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities
index futures contracts;
■
Political
or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are
traded;
■
Announcements
concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s
operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby
the Valuation Committee uses a pricing service to provide factors to update the fair value of
equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the
pricing time of the Fund. For other significant events, the Fund
may seek to obtain more current quotations or price evaluations from alternative
pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the
investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations
made in response to significant events.
Repurchase Agreements
The
Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to
a repurchase agreement to transfer to the Fund’s custodian
or sub-custodian eligible securities or cash with a market value (after transaction
costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred
to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control”
as those terms are defined in the Uniform Commercial Code. Certain
repurchase agreements may be structured as loans secured by a security
interest or lien on the eligible securities. The Fund has established procedures for monitoring the market value of the transferred securities
and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also
allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase
price or in exchange for other eligible securities of equivalent market value.
The insolvency of the
other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause
the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund
in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into
repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the
custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund
will participate on a pro rata basis with the other investment
companies and clients in its share of the securities transferred under such repurchase
agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment
transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an
identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Foreign dividends are recorded on the
ex-dividend date or when the Fund is informed of the ex-dividend date. Amortization/accretion
of premium and discount is included in investment income. Gains and losses realized on principal payment of mortgage-backed
securities (paydown gains and losses) are classified as part of investment income. Positive or negative inflation adjustments
on Treasury Inflation-Protected Securities are included in interest income. Distributions of net investment income and capital gains,
if any, are declared and paid at least annually. Non-cash dividends included in dividend income, if any, are recorded at fair value. Investment
income, realized and unrealized gains and losses, and certain fund-level expenses are allocated to each class based on relative
average daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund
expense reimbursement of $5,660 is disclosed in Note 5. Dividends
are declared separately for each class. No class has preferential dividend
rights; differences in per share dividend rates are generally due to differences in separate class expenses.
Transfer Agent Fees
For
the year ended July 31, 2026, transfer agent fees for the Fund were as follows:
|
|
Transfer
Agent
Fees
Incurred |
|
Class
A Shares |
$121,646
|
|
Class
C Shares |
17,116
|
|
Institutional
Shares |
115,359
|
|
Class
R6 Shares |
4,726
|
|
TOTAL
|
$258,847
|
Annual
Financial Statements and Additional Information
24
Other Service Fees
The
Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial
intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder
accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service
fees.
For the year ended July 31, 2026, other
service fees for the Fund were as follows:
|
|
Other
Service
Fees
Incurred |
|
Class
A Shares |
$389,832
|
|
Class
C Shares |
42,537
|
|
TOTAL
|
$432,369
|
Federal Taxes
It
is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 and to distribute to shareholders
each year substantially all of its income. Accordingly, no provision
for federal income tax is necessary. As of and during the year ended July
31, 2026, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related
to tax liabilities as income tax expense in the Statement of Operations.
As of July 31, 2026, tax years 2023 through 2026 remain subject to
examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of
Massachusetts.
The Fund may be subject
to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income
or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized
gains as income and/or gains are earned.
When-Issued and Delayed-Delivery Transactions
The
Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased
on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the
contract.
Futures Contracts
The
Fund purchases and sells financial futures contracts to seek to increase return and to manage currency, duration, market, security and
yield curve risks. Upon entering into a financial futures contract with a broker, the Fund is required to deposit with a broker, either
a specified amount of cash, which is shown as due from broker
in the Statement of Assets and Liabilities or U.S. government securities. Futures
contracts are valued daily and unrealized gains or losses are recorded in a “variation margin” account. The Fund receives
from or pays to the broker a specified amount of cash based upon
changes in the variation margin account. When a contract is closed, the Fund recognizes
a realized gain or loss. Futures contracts have market risks, including the risk that the change in the value of the contract may not
correlate with the changes in the value of the underlying securities. There is minimal counterparty risk to the Fund since futures contracts
are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures contracts, guarantees the
futures contracts against default.
Futures contracts outstanding at period
end are listed after the Fund’s Portfolio of Investments.
The average notional
value of long and short futures contracts held by the Fund throughout the period was $34,988,288 and $740,255,
respectively. This is based on amounts held as of each month-end throughout the fiscal period.
Foreign Currency Translation
The
accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated
into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales
of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded.
The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
Reported net realized
foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
Securities Lending
The
Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the
loans within the program is one year or less. The Fund receives
cash collateral for securities loaned, which generally is invested in an affiliated
money market fund. Collateral is maintained at a minimum level of 100% of the fair value of investments loaned, plus interest, if applicable.
In accordance with the Fund’s securities lending agreement, the fair value of securities on loan is determined each day at the close
of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next
Annual
Financial Statements and Additional Information
25
business day. Earnings
from collateral invested in affiliated holdings as presented parenthetically on the Statement of Operations do not reflect
fees and rebates and are allocated between the borrower of the security, the securities lending agent, as a fee for its services under
the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on
loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are
deemed to be material by the Adviser. There can be no assurance
that the Fund will have sufficient notice of such matters to be able to terminate
the loan in time to vote thereon.
As of July 31, 2026, the Fund had no securities
on loan.
Restricted Securities
The
Fund may purchase securities which are considered restricted. Restricted securities are securities that either: (a) cannot be offered
for public sale without first being registered, or being able
to take advantage of an exemption from registration, under the Securities Act of
1933; or (b) are subject to contractual restrictions on public sales. In some cases, when a security cannot be offered for public sale
without first being registered, the issuer of the restricted security
has agreed to register such securities for resale, at the issuer’s expense, either
upon demand by the Fund or in connection with another registered offering of the securities. Many such restricted securities may be
resold in the secondary market in transactions exempt from registration. Restricted securities may be determined to be liquid under criteria
established by the Trustees. The Fund will not incur any registration costs upon such resales. The Fund’s restricted securities,
like other securities, are priced in accordance with procedures
established by and under the general supervision of the Adviser.
Additional Disclosure Related to Derivative Instruments
|
Fair
Value of Derivative Instruments | ||
|
|
Liabilities
| |
|
|
Statement
of
Assets
and
Liabilities
Location
|
Fair
Value
|
|
Derivatives
not accounted for as hedging
instruments
under ASC Topic 815 |
|
|
|
Interest
rate contracts |
Payable
for variation margin
on
futures contracts |
$319,073*
|
|
*
|
Includes
cumulative net depreciation of futures contracts as reported in the footnotes to the Portfolio of Investments. Only the current day’s
variation margin is
reported
within the Statement of Assets and Liabilities. |
The Effect of Derivative Instruments on the Statement
of Operations for the Year Ended July 31, 2026
|
Amount
of Realized Gain or (Loss) on Derivatives Recognized in Income | |
|
|
Futures
Contracts
|
|
Interest
rate contracts |
$(351,142)
|
|
Change
in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |
|
|
Futures
Contracts
|
|
Interest
rate contracts |
$(262,924)
|
Other
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from
those estimated. The Fund applies investment company accounting
and reporting guidance.
3. SHARES
OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
A Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
966,550
|
$22,242,703
|
1,123,636
|
$24,782,310
|
|
Shares
issued to shareholders in payment of distributions declared |
561,690
|
12,661,166
|
580,962
|
12,838,576
|
|
Shares
redeemed |
(1,029,288)
|
(23,659,111)
|
(974,496)
|
(21,636,858)
|
|
NET
CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
498,952
|
$11,244,758
|
730,102
|
$15,984,028
|
Annual
Financial Statements and Additional Information
26
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
C Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
202,538
|
$4,508,894
|
244,632
|
$5,274,772
|
|
Shares
issued to shareholders in payment of distributions declared |
58,286
|
1,272,346
|
52,980
|
1,136,699
|
|
Shares
redeemed |
(150,811)
|
(3,356,638)
|
(176,009)
|
(3,833,123)
|
|
NET
CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
110,013
|
$2,424,602
|
121,603
|
$2,578,348
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Institutional
Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
1,917,023
|
$44,470,369
|
1,435,513
|
$32,243,774
|
|
Shares
issued to shareholders in payment of distributions declared |
418,470
|
9,477,771
|
401,466
|
8,913,886
|
|
Shares
redeemed |
(1,285,704)
|
(29,490,246)
|
(1,142,633)
|
(25,209,362)
|
|
NET
CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
1,049,789
|
$24,457,894
|
694,346
|
$15,948,298
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
R6 Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
134,413
|
$3,077,250
|
606,064
|
$13,021,437
|
|
Shares
issued to shareholders in payment of distributions declared |
62,683
|
1,415,191
|
15,786
|
349,335
|
|
Shares
redeemed |
(111,865)
|
(2,588,354)
|
(82,743)
|
(1,807,804)
|
|
NET
CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS |
85,231
|
$1,904,087
|
539,107
|
$11,562,968
|
|
NET
CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS |
1,743,985
|
$40,031,341
|
2,085,158
|
$46,073,642
|
4. FEDERAL
TAX INFORMATION
The tax character of distributions as reported
on the Statement of Changes in Net Assets for the years ended July 31, 2026 and 2025,
was as follows:
|
|
2026
|
2025
|
|
Ordinary
income |
$4,096,278
|
$4,068,918
|
|
Long-term
capital gains |
$21,085,066
|
$19,794,937
|
As of July 31, 2026, the components of distributable
earnings on a tax-basis were as follows:
|
Undistributed
ordinary income |
$1,339,027
|
|
Net
unrealized appreciation |
$46,646,906
|
|
Undistributed
long-term capital gains |
$11,425,456
|
|
TOTAL
|
$59,411,389
|
At July 31, 2026, the cost of investments
for federal tax purposes was $283,153,015. The net unrealized appreciation of investments for federal
tax purposes was $46,646,906. This consists of unrealized appreciation from investments for those securities having an excess of value
over cost of $56,030,049 and unrealized depreciation from investments for those securities having an excess of cost over value of $9,383,143.
The amounts presented are inclusive of derivative contracts. The difference between book-basis and tax-basis net unrealized appreciation
is attributable to differing treatments for the deferral of losses on wash sales and mark to market of futures contracts.
5. INVESTMENT
ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The
advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund’s average daily net assets.
Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and
when appropriate, to maintain positive or zero net yields.
The Adviser has agreed
to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment
companies. For the year ended July 31, 2026, the Adviser reimbursed $5,660.
Certain of the Fund’s
assets are managed by Federated Investment Management Company (the “Sub-Adviser”). Under the terms of a sub-advisory
agreement between the Adviser and the Sub-Adviser, the Sub-Adviser receives an allocable portion of the Fund’s adviser fee.
The fee is paid by the Adviser out of its resources and is not an incremental Fund expense. For the year ended July 31, 2026, the Sub-Adviser
earned a fee of $264,548.
Annual
Financial Statements and Additional Information
27
Administrative Fee
Federated
Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and
services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated
Hermes Funds subject to a fee under the Administrative Services
Agreement. The fee paid to FAS is based on the average daily net assets
of the Investment Complex as specified below:
|
Administrative
Fee |
Average
Daily Net Assets
of
the Investment Complex |
|
0.100%
|
on
assets up to $50 billion |
|
0.075%
|
on
assets over $50 billion |
Subject to the terms described in the Expense
Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, the annualized fee paid to FAS was 0.080% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket
expenses to the Fund.
Distribution Services Fee
The
Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will compensate Federated Securities Corp. (FSC), the principal
distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares
to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses
at the following percentages of average daily net assets annually,
to compensate FSC:
|
|
Percentage
of Average Daily
Net
Assets of Class |
|
Class
A Shares |
0.05%
|
|
Class
C Shares |
0.75%
|
Subject to the terms described in the Expense
Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, distribution services fees for the Fund were as follows:
|
|
Distribution
Services
Fees
Incurred |
|
Class
C Shares |
$127,658
|
When FSC receives fees, it may pay some
or all of them to financial intermediaries whose customers purchase shares. For the year ended July
31, 2026, FSC retained $38,377 of fees paid by the Fund. For the year ended July 31, 2026, the Fund’s Class A Shares did not incur
a distribution services fee; however, it may begin to incur this
fee upon approval of the Trustees.
Sales Charges
Front-end
sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended
July 31, 2026, FSC retained $13,153 in sales charges from the sale of Class A Shares. FSC also retained $11,406 and $4,321 of CDSC
relating to redemptions of Class A Shares and Class C Shares, respectively.
Other Service Fees
For
the year ended July 31, 2026, FSSC received $19,532 of the other service fees disclosed in Note 2.
Expense Limitation
The
Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding
interest expense, extraordinary expenses and proxy-related expenses, if any) paid by the Fund’s Class A Shares, Class C Shares,
Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 1.31%, 2.10%, 1.06% and
1.05% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October
1, 2027; or (b) the date of the Fund’s next effective Prospectus.
While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing
these arrangements prior to the Termination Date, these arrangements may only be terminated or the Fee Limit increased prior
to the Termination Date with the approval of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain
Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate
payment, Independent Directors’/Trustees’ fees and
certain expenses related to conducting meetings of the Directors/Trustees and other
miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related
to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous
Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Annual
Financial Statements and Additional Information
28
6. INVESTMENT
TRANSACTIONS
Purchases and sales of investments, excluding
long-term U.S. government securities and short-term obligations, for the year ended July
31, 2026, were as follows:
|
Purchases
|
$180,780,753
|
|
Sales
|
$156,975,912
|
7. CONCENTRATION
OF RISK
The Fund may invest a portion of its assets
in securities of companies that are deemed by the Fund’s management to be classified in similar
business sectors. Economic developments may have an effect on the liquidity and volatility of the portfolio securities.
A substantial part of
the Fund’s portfolio may be comprised of entities in the Information Technology sector. As a result, the Fund may be
more susceptible to any economic, business, political or other developments which generally affect these entities.
8. LINE
OF CREDIT
The Fund participates with certain other
Federated Hermes Funds, on a several basis, in an up to $400,000,000 unsecured, 364-day, committed,
revolving line of credit (LOC) agreement dated June 16, 2026. The LOC was made available to temporarily finance the repurchase
or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary
or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s
ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied
before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on
any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and
(iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under
the LOC pays its pro rata share of a commitment fee based on the amount of
the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2026, the Fund had no outstanding
loans. During the year ended July 31, 2026, the Fund did not utilize the LOC.
9. INTERFUND
LENDING
Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries
of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility
allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2026, there were no outstanding loans. During
the year ended July 31, 2026, the program was not utilized.
10. OPERATING
SEGMENTS
An operating segment is defined as a component
of a public entity that engages in business activities from which it may recognize revenues
and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM)
to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. A management committee of the Adviser acts as the CODM. The Fund represents a single operating segment, as the
CODM monitors the operating results of the Fund as a whole and the strategic asset allocation is determined based on the investment
objective of the Fund and executed by the Fund’s portfolio management team. The financial information in the form of the Fund’s
portfolio composition, total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations,
subscriptions and redemptions) which is reviewed by the CODM to assess the Fund’s performance in comparison to the Fund’s
benchmarks and to make resource allocation decisions for the Fund’s single segment is consistent with the information presented
in these financial statements. Segment assets are reflected on
the accompanying Statement of Assets and Liabilities as “total assets” and significant
segment expenses are listed on the accompanying Statement of Operations.
11. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties to the Fund). In addition,
in the normal course of business, the Fund provides certain indemnifications under
arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into
by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to
the arrangement, provided the third party’s actions are
not deemed to have breached an agreed-upon standard of care (such as willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund
does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss
to be remote.
12. FEDERAL
TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2026,
50.9% of total ordinary income distributions made by the Fund are qualifying dividends which may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported
in conjunction with the reporting of your distributions on Form 1099-DIV.
Of the ordinary income
distributions made by the Fund during the year ended July 31, 2026, 41.1% qualify for the dividend received deduction
available to corporate shareholders.
Annual
Financial Statements and Additional Information
29
For
the year ended July 31, 2026, 58.9% of total ordinary income distributions qualified as business interest income for purposes of 163(j)
of the Code and the regulations thereunder.
For the year ended July 31, 2026, the amount
of long-term capital gains designated by the Fund was $21,085,066.
Annual
Financial Statements and Additional Information
30
Report of Independent Registered
Public Accounting Firm
TO THE SHAREHOLDERS AND THE
BOARD OF TRUSTEES OF FEDERATED HERMES MDT BALANCED FUND:
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of Federated Hermes MDT Balanced Fund (the
“Fund”) (one of the portfolios constituting Federated Hermes MDT Series (the “Trust”)), including the portfolio
of investments, as of July 31, 2026, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period
then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated
Hermes MDT Series) at July 31, 2026, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are
the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2026, by correspondence with the custodian, brokers, and others; when replies
were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor
of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2026
September 23, 2026
Annual
Financial Statements and Additional Information
31
Evaluation
and Approval of Advisory Contract–May
2026
Federated Hermes MDT Balanced
Fund (the “Fund”)
At its meetings in May 2026 (the
“May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who
are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the
“Independent Trustees”), reviewed and unanimously approved the continuation of the investment advisory contract between
the Fund and Federated MDTA LLC (the “Adviser”) and the investment sub-advisory contract between the Adviser
and Federated Investment Management Company (the “Sub-Adviser” and together with the Adviser, the “Advisers”)
with respect to the Fund (together, the “Contracts”) for an additional one-year term. The Board’s determination
to approve the continuation of the Contracts reflects the exercise of its business judgment after considering such
information deemed necessary to evaluate the terms of the Contracts and to approve the continuation of the existing arrangements.
The information, factors and conclusions that formed the basis for the Board’s approval are summarized
below.
Information Received
and Review Process
At the request
of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance
of its May Meetings an independent written report regarding data related to the Fund’s management fee (the
“CCO Management Fee Report”). The Board considered the CCO Management Fee Report, along with other information,
in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation
of the Contracts.
In addition
to the CCO Management Fee Report, the Board considered information specifically prepared in connection with
the approval of the continuation of the Contracts that was presented at the May Meetings. In this regard, in the months
preceding the May Meetings, the Board requested and reviewed written responses and supporting materials prepared
by the Advisers and their affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes
by independent legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including
those summarized below. The Board also considered such additional matters as the Independent Trustees deemed
reasonably necessary to evaluate the Contracts, which included detailed information about the Fund and Federated Hermes
furnished to the Board at its meetings throughout the year.
The Board’s
consideration of the Contracts included review of materials and information covering the following matters,
among others: (1) copies of the Contracts; (2) the nature, quality and extent of the advisory and other services provided
to the Fund by Federated Hermes; (3) Federated Hermes’ business and operations; (4) the Advisers’ investment philosophy,
personnel and processes; (5) the Fund’s investment objective and strategies; (6) the Fund’s short-term and long-term
performance - in absolute terms (both on a gross basis and net of expenses) and relative to an appropriate group of
peer funds and its benchmark; (7) the Fund’s fees and expenses, including the advisory fee and the overall expense structure
of the Fund - in absolute terms and relative to an appropriate group of peer funds, with due regard for contractual or
voluntary expense limitations (if any); (8) the financial condition of Federated Hermes; (9) the Adviser’s profitability with
respect to managing the Fund; (10) distribution and sales activity for the Fund; and (11) the use and allocation of brokerage
commissions derived from trading the Fund’s portfolio securities (if any).
The Board
also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered
funds in evaluating the Contracts. Using these judicial decisions as a guide, the Board considered several factors it
deemed relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund, including: (1) the nature
and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the
fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser
of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the
fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its
shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with
the fund, including research services received from
brokers that execute fund trades and any fees paid to affiliates of the adviser
for services rendered to the fund; (5) comparative fees and expenses, including a comparison of management fees paid
to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees
charged to institutional and other advisory clients of the same adviser for what might be viewed as like services; and (6)
the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their
expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the
adviser’s services and fees. The Board considered that the Securities and Exchange Commission (“SEC”) disclosure requirements
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with
the factors listed above. The Board was guided by these factors in its evaluation of the Contracts to the extent it
Annual
Financial Statements and Additional Information
32
considered
them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors
in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters
relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively,
the “Federated Hermes Funds”).
In addition,
the Board considered the preferences and expectations of Fund shareholders and the potential disruptions of the
Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate
or not renew the Contracts. In particular, the Board recognized that many shareholders likely have invested in the
Fund based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated
Hermes will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there
are a range of investment options available to the Fund’s shareholders in the marketplace, and such shareholders, having
had the opportunity to consider other investment options, have effectively selected Federated Hermes by virtue of investing
in the Fund.
In determining
to approve the continuation of the Contracts, the members of the Board reviewed and evaluated information
and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment.
While individual members of the Board may have weighed certain factors differently, the Board’s determination
to approve the continuation of the Contracts was based on a comprehensive consideration of all information provided
to the Board throughout the year. The Board recognized that its evaluation process is evolutionary and that the factors
considered and the emphasis placed on relevant factors may change in recognition of changing circumstances in the
registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal
counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive
session with their independent legal counsel and without management present to review the relevant materials and
consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes
also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations
furnished to the Board at the May Meetings. The Board considered the approval of the Contracts for the Fund
as part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were
made on a fund-by-fund basis.
Nature, Extent and
Quality of Services
The Board
considered the nature, extent and quality of the services provided to the Fund by the Advisers and the resources
of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the
Contracts and the full range of services provided to the Fund by Federated Hermes. The Board considered the Advisers’
personnel, investment philosophy and process, investment research capabilities and resources, trade operations capabilities,
experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities
of the portfolio management team primarily responsible for the day-to-day management of the Fund and evaluated
Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board
considered the trading operations by the Advisers, including the execution of portfolio transactions and the selection of
brokers for those transactions. The Board also considered the Advisers’ ability to deliver competitive investment performance
for the Fund when compared to the Fund’s Performance Peer Group (as defined below).
In addition,
the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to
consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational
enhancements that are designed to benefit the Federated Hermes Funds. The Board considered Federated Hermes’
oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted
the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered
the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests
made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes
is responsible for providing the Federated Hermes Funds’ officers.
The Board
received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The
Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated
Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any
compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated
Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes
in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended,
including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The
Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes
Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and
policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led,
and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard.
Annual
Financial Statements and Additional Information
33
In
addition, the Board noted Federated Hermes’ commitment to maintaining high quality systems and expending substantial
resources to prepare for and respond to ongoing changes due to the market, regulatory and control environments
in which the Fund and its service providers operate.
The Board
considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive
array of funds with different investment objectives, policies and strategies. The Board considered the expenses
that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in
sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted
the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to
exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on
these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services
provided by the Advisers to the Fund.
Fund Investment Performance
The Board
considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board
considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered
detailed investment reports on, and the Advisers’ analysis of, the Fund’s performance over different time periods
that were provided to the Board throughout the year and in connection with the May Meetings. These reports included,
among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared
to one or more relevant categories or groups of peer funds and the Fund’s benchmark, performance attribution information
and commentary on the effect of market conditions. The Board noted that it evaluated investment performance at
meetings throughout the year and received reports from Federated Hermes regarding the performance of certain Federated
Hermes Funds as well as Federated Hermes’ explanations for less favorable performance and any specific actions
Federated Hermes had taken, or had determined to take, to seek to enhance Fund investment performance and the results
of those actions.
The Board
also reviewed comparative information regarding the performance of other registered funds in the category of
peer funds selected by Morningstar, Inc. (“Morningstar”), an independent fund ranking organization (the “Performance
Peer Group”). The Board noted the CCO’s
statement that comparisons to fund peer groups may be helpful, though not conclusive,
in evaluating the performance of the Advisers in managing the Fund. The Board also considered a report comparing
the performance of the Fund solely to other funds with a quantitative focus in the Performance Peer Group.
The Board
also considered comparative performance data from Lipper, Inc. that was included in reports provided to the Board
throughout the year.
The Board
considered that for the one-year, three-year and five-year periods ended December 31, 2025, the Fund’s performance
was above the median of the Performance Peer Group.
Based on
these considerations, the Board concluded that it had continued confidence in the Advisers’ overall capabilities
to manage the Fund.
Fund Expenses
The Board
considered the advisory fee, sub-advisory fee, and overall expense structure of the Fund and the comparative fee
and expense information that had been provided in connection with the May Meetings. In this regard, the Board was presented
with, and considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense
ratios and each element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody
fees, portfolio accounting fees and transfer agency fees) relative to an appropriate group of peer funds compiled by
Federated Hermes from the overall category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board
received a description of the methodology used to select the Expense Peer Group from the overall Morningstar category.
The Board also reviewed comparative information regarding the fees and expenses of the broader group of funds in
the overall Morningstar category.
While mindful
that courts have cautioned against giving too much weight to comparative information concerning fees charged
to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board
in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds more
heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The
Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained
by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore,
appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund
competes.
Annual
Financial Statements and Additional Information
34
The
Board reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position
of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory
fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements,
and that the overall expense structure of the Fund remained competitive in the context of other factors considered
by the Board. In this regard, the Board considered that, while comparisons to the Fund’s Expense Peer Group are
relevant in judging the reasonableness of advisory fees, the quantitative focus of the management of the Fund makes fee
and expense comparisons to the Expense Peer Group particularly difficult. The Board further considered that, although the
Fund’s advisory fee was above the median of the Expense Peer Group, the funds in the Expense Peer Group varied widely
in terms of the complexity of their management, and the management of the Fund is among the more complex funds
relative to the Expense Peer Group.
The Board
also received and considered information about the nature and extent of services offered and fees charged by Federated
Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including
non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for
which any of the Advisers or their affiliates serve as sub-adviser. The Board noted the CCO’s statement that non-registered
fund clients are inherently different products due to the following differences, among others: (i) types of targeted
investors; (ii) applicable laws and regulations; (iii) legal structures; (iv) average account sizes; (v) portfolio management
techniques made necessary by different cash flows and different associated costs; (vi) the time spent by portfolio
managers and their teams (among other personnel across various departments, including legal, compliance and risk
management) in reviewing securities pricing; (vii) SEC mandated risk management programs with respect to fund liquidity
and use of derivatives; (viii) questions on regulatory reporting; (ix) a variety of different administrative responsibilities;
and (x) degrees of risk associated with management. The Board also considered information regarding the differences
in the nature of the services required for Federated Hermes to manage its proprietary registered fund business versus
managing a discrete pool of assets as a sub-adviser to another institution’s registered fund, noting the CCO’s statement
that Federated Hermes generally performs significant additional services and assumes substantially greater risks in
managing the Fund and other Federated Hermes Funds than in its role as sub-adviser to an unaffiliated third-party registered
fund. The Board noted that the CCO emphasized that differences in fees for providing advisory services to other types
of clients may not be appropriate when judging the appropriateness of the Federated Hermes Funds’ advisory fees because
of the different services provided.
In the case
of the Fund, the Board noted that Federated Hermes does not manage any other types of clients that are comparable
to the Fund.
Based on
these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction
with other matters considered, are reasonable in light of the services provided.
Profitability
The Board
received and considered profitability information furnished by Federated Hermes. Such profitability information
included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund
basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered
the CCO’s statement that, while the cost allocation report applies consistent allocation processes for purposes of
general comparison of funds, the inherent difficulties in arbitrarily allocating costs lack precision and may cause the report
to be unreliable because a single change in an allocation estimate can dramatically alter the resulting estimate of cost
and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered
the CCO’s statement that the allocation methodologies used by Federated Hermes in estimating profitability for purposes
of reporting to the Board in connection with the continuation of the Contracts are consistent with the methodologies
previously reviewed by an independent consultant. The Board noted that the independent consultant had previously
conducted a review of the allocation methodologies and reported to the Board that, although there is no single best
method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s
statement that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation
to the services provided.
The Board
also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly-held
fund management companies, including information regarding profitability trends over time. The Board recognized
that profitability comparisons among fund management companies are difficult because of the variation in the type
of comparative information that is publicly available, and the profitability of any fund management company is affected
by numerous factors. The Board considered the CCO’s statement that, based on such profitability information, Federated
Hermes’ profit margins did not appear to be excessive and that Federated Hermes appeared financially sound, with
the resources available to fulfill its contractual obligations.
Annual
Financial Statements and Additional Information
35
Economies
of Scale
The Board
received and considered information about the notion of possible realization of “economies of scale” as a fund
grows larger, the difficulties of isolating and quantifying economies of scale at an individual fund level, and the extent
to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes
has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio
management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity
and information security programs; internal audit and risk management functions; and technology, systems capabilities
and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed
to provide enhanced or expanded services to the Federated Hermes Funds and their shareholders. The Board considered
that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole.
In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies
of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes
Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in
the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds
and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future.
The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds
in recent years, which has resulted in benefits being realized by shareholders.
The Board
also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments)
that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered
that Federated Hermes believes that this information is relevant to consider whether Federated Hermes had an incentive
to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating
the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines
on economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring
fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board
considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes
derived from its relationships with the Federated Hermes Funds. The Board considered that Federated Hermes may
derive a benefit to its reputation as an adviser to the Fund, which may help in attracting other clients and investment personnel.
The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory
contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds
under separate service contracts, including for serving as the Federated Hermes Funds’ administrator and distributor.
In this regard, the Board considered that Federated Hermes’ affiliates provide distribution and shareholder services
to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant
to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any,
that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the
Federated Hermes Funds.
Conclusions
The Board
considered the CCO’s presentation and statements and the information accompanying the CCO Management Fee
Report. The Board recognized that its evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements
is a continuing and ongoing process that is informed by the information that the Board requests and receives from
management throughout the course of the year.
On the basis
of the information and factors summarized above, among other information and factors deemed relevant by the
Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation
of the Contracts. The Board based its determination to approve the Contracts on the totality of the circumstances
and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations
identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them
to be determinative.
Annual
Financial Statements and Additional Information
36
Mutual funds are not
bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Investment in mutual funds involves investment risk, including the possible loss of principal.
This information is authorized
for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus,
which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes MDT Balanced Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31421R841
CUSIP 31421R833
CUSIP 31421R825
CUSIP 31421R692
CUSIP 31421R833
CUSIP 31421R825
CUSIP 31421R692
37326 (9/26)
©
2026 Federated Hermes, Inc.
Annual Financial Statements
and Additional Information
and Additional Information
July 31, 2026
|
Share
Class | Ticker
|
A | QALGX
|
C | QCLGX
|
Institutional | QILGX
|
R6 | QRLGX
|
Federated Hermes MDT Large Cap Growth Fund
A Portfolio of Federated Hermes MDT Series
Not FDIC Insured ▪ May
Lose Value ▪ No Bank Guarantee
CONTENTS
Portfolio
of Investments
July 31, 2026
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—97.9% |
|
|
|
|
Communication
Services—14.6% |
|
|
845,653
|
|
Alphabet,
Inc., Class A |
$ 301,162,403
|
|
451,811
|
1
|
Live
Nation Entertainment, Inc. |
78,673,849
|
|
319,169
|
|
Meta
Platforms, Inc. |
177,684,574
|
|
1,293,407
|
1
|
Netflix,
Inc. |
92,750,216
|
|
1,146,047
|
1
|
Pinterest,
Inc. |
27,516,589
|
|
79,966
|
1
|
Reddit,
Inc. |
11,248,817
|
|
152,295
|
1
|
Spotify
Technology S.A. |
76,138,362
|
|
16,488
|
1
|
Take-Two
Interactive Software, Inc. |
4,005,265
|
|
2,832,771
|
1
|
Trade
Desk, Inc./The |
51,103,189
|
|
|
|
TOTAL
|
820,283,264
|
|
|
|
Consumer
Discretionary—9.0% |
|
|
271,379
|
1
|
Airbnb,
Inc. |
41,119,346
|
|
227,390
|
1
|
Amazon.com,
Inc. |
61,754,576
|
|
449,850
|
1
|
Chewy,
Inc. |
10,166,610
|
|
72,124
|
1
|
Deckers
Outdoor Corp. |
6,987,373
|
|
23,801
|
1
|
Duolingo,
Inc. |
3,208,613
|
|
229,150
|
1
|
Five
Below, Inc. |
49,755,339
|
|
392,245
|
1
|
Lululemon
Athletica, Inc. |
46,626,163
|
|
639,933
|
1
|
Tesla,
Inc. |
199,153,549
|
|
817,359
|
1
|
Viking
Holdings Ltd. |
85,291,412
|
|
|
|
TOTAL
|
504,062,981
|
|
|
|
Consumer
Staples—1.0% |
|
|
49,432
|
|
Costco
Wholesale Corp. |
47,053,826
|
|
160,926
|
1
|
Maplebear,
Inc. |
7,177,300
|
|
|
|
TOTAL
|
54,231,126
|
|
|
|
Energy—0.0%
|
|
|
22,888
|
|
Weatherford
International PLC |
2,009,338
|
|
|
|
Financials—3.8%
|
|
|
78,035
|
|
Ameriprise
Financial, Inc. |
42,594,624
|
|
201,200
|
|
Bank
of New York Mellon Corp. |
31,453,596
|
|
2,487,171
|
1
|
Fiserv,
Inc. |
134,158,004
|
|
36,803
|
|
Interactive
Brokers Group, Inc., Class A |
3,238,296
|
|
|
|
TOTAL
|
211,444,520
|
|
|
|
Health
Care—5.6% |
|
|
54,504
|
|
AbbVie,
Inc. |
13,677,234
|
|
34,926
|
1
|
Align
Technology, Inc. |
5,908,082
|
|
18,607
|
1
|
Alnylam
Pharmaceuticals, Inc. |
3,824,111
|
|
36,712
|
|
Amgen,
Inc. |
14,139,994
|
|
130,000
|
|
Eli
Lilly & Co. |
149,349,200
|
|
40,583
|
|
Gilead
Sciences, Inc. |
5,284,312
|
|
11,700
|
1
|
Insulet
Corp. |
1,934,595
|
|
202,781
|
1
|
Intuitive
Surgical, Inc. |
71,648,611
|
|
54,967
|
|
Regeneron
Pharmaceuticals, Inc. |
41,919,483
|
|
35,455
|
1
|
Veeva
Systems, Inc. |
7,225,020
|
|
|
|
TOTAL
|
314,910,642
|
|
|
|
Industrials—9.1%
|
|
|
68,054
|
|
Allison
Transmission Holdings, Inc. |
7,794,905
|
|
88,004
|
1
|
Bloom
Energy Corp. |
18,112,103
|
|
29,139
|
|
Caterpillar,
Inc. |
23,742,749
|
|
23,870
|
|
Comfort
Systems USA, Inc. |
41,287,700
|
Annual
Financial Statements and Additional Information
1
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Industrials—continued
|
|
|
24,661
|
|
Eaton
Corp. PLC |
$ 10,239,247
|
|
470,627
|
|
GE
Aerospace |
169,458,664
|
|
164,876
|
|
GE
Vernova, Inc. |
163,275,054
|
|
8,139
|
|
Howmet
Aerospace, Inc. |
2,297,314
|
|
23,799
|
|
Johnson
Controls International PLC |
3,490,361
|
|
13,041
|
1
|
Mastec,
Inc. |
3,431,087
|
|
92,016
|
|
nVent
Electric PLC |
14,154,821
|
|
40,529
|
|
Paycom
Software, Inc. |
6,645,135
|
|
16,107
|
|
Quanta
Services, Inc. |
10,749,168
|
|
35,349
|
|
Trane
Technologies PLC |
16,082,028
|
|
278,310
|
1
|
Uber
Technologies, Inc. |
19,581,892
|
|
9,743
|
|
Vertiv
Holdings Co. |
2,353,616
|
|
|
|
TOTAL
|
512,695,844
|
|
|
|
Information
Technology—53.5% |
|
|
34,203
|
1
|
Adobe,
Inc. |
8,564,773
|
|
291,918
|
1
|
Advanced
Micro Devices, Inc. |
138,996,756
|
|
276,640
|
|
Amphenol
Corp., Class A |
44,456,048
|
|
1,486,385
|
|
Apple,
Inc. |
459,159,190
|
|
113,661
|
|
Applied
Materials, Inc. |
57,702,280
|
|
41,237
|
1
|
AppLovin
Corp. |
16,325,728
|
|
638,030
|
1
|
Arista
Networks, Inc. |
115,068,710
|
|
52,245
|
1
|
Atlassian
Corp. PLC |
5,277,529
|
|
657,942
|
|
Broadcom,
Inc. |
256,123,662
|
|
65,095
|
1
|
Cadence
Design Systems, Inc. |
22,133,602
|
|
155,036
|
1
|
Coherent
Corp. |
40,757,414
|
|
52,184
|
|
Corning,
Inc. |
7,214,438
|
|
577,378
|
1
|
Crowdstrike
Holdings, Inc. |
110,198,365
|
|
14,493
|
1
|
Datadog,
Inc. |
3,883,689
|
|
229,222
|
1
|
DocuSign,
Inc. |
12,568,242
|
|
104,134
|
1
|
Everpure,
Inc. |
8,036,021
|
|
362,463
|
1
|
Fortinet,
Inc. |
58,700,883
|
|
254,859
|
1
|
Gartner,
Inc., Class A |
38,488,806
|
|
377,245
|
|
Intuit,
Inc. |
119,235,827
|
|
74,175
|
|
Jabil,
Inc. |
23,368,834
|
|
79,279
|
1
|
Keysight
Technologies, Inc. |
25,296,343
|
|
136,720
|
|
KLA
Corp. |
24,995,150
|
|
376,007
|
|
Lam
Research Corp. |
110,177,571
|
|
16,472
|
1
|
Lumentum
Holdings, Inc. |
11,760,020
|
|
120,346
|
|
Marvell
Technology, Inc. |
22,572,096
|
|
226,562
|
|
Micron
Technology, Inc. |
186,467,323
|
|
618,908
|
|
Microsoft
Corp. |
287,618,926
|
|
6,058
|
|
MKS,
Inc. |
1,801,952
|
|
3,067
|
|
Monolithic
Power Systems, Inc. |
4,373,634
|
|
123,908
|
|
NetApp,
Inc. |
22,117,578
|
|
2,642,704
|
|
NVIDIA
Corp. |
530,522,828
|
|
253,711
|
1
|
ON
Semiconductor Corp. |
20,705,355
|
|
212,665
|
|
Oracle
Corp. |
27,618,804
|
|
33,642
|
1
|
Palantir
Technologies, Inc. |
4,139,985
|
|
91,704
|
1
|
Palo
Alto Networks, Inc. |
30,430,138
|
|
27,637
|
1
|
Rambus,
Inc. |
2,515,796
|
|
10,092
|
1
|
Sandisk
Corp. |
12,260,064
|
|
11,329
|
1
|
Snowflake,
Inc. |
3,322,569
|
|
43,007
|
|
Texas
Instruments, Inc. |
11,858,750
|
|
8,673
|
1
|
TTM
Technologies, Inc. |
1,001,211
|
Annual
Financial Statements and Additional Information
2
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Information
Technology—continued |
|
|
30,261
|
1
|
Tyler
Technologies, Inc. |
$ 9,368,806
|
|
187,995
|
|
Western
Digital Corp. |
102,427,196
|
|
|
|
TOTAL
|
2,999,612,892
|
|
|
|
Materials—1.2%
|
|
|
183,057
|
|
AngloGold
Ashanti PLC |
14,520,081
|
|
418,488
|
|
Hecla
Mining Co. |
5,909,050
|
|
257,439
|
|
Southern
Copper Corp. |
47,036,680
|
|
|
|
TOTAL
|
67,465,811
|
|
|
|
Real
Estate—0.1% |
|
|
216,363
|
1
|
CoStar
Group, Inc. |
6,222,600
|
|
|
|
TOTAL
COMMON STOCKS
(IDENTIFIED
COST $4,556,562,554) |
5,492,939,018
|
|
|
|
INVESTMENT
COMPANY—2.1% |
|
|
118,953,011
|
|
Federated
Hermes Government Obligations Fund, Premier Shares, 3.57%2
(IDENTIFIED
COST $118,953,011) |
118,953,011
|
|
|
|
TOTAL
INVESTMENT IN SECURITIES—100.0%
(IDENTIFIED
COST $4,675,515,565)3
|
5,611,892,029
|
|
|
|
OTHER
ASSETS AND LIABILITIES - NET—(0.0)%4
|
(924,396)
|
|
|
|
NET
ASSETS—100% |
$5,610,967,633
|
Transactions with affiliated investment
companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period
ended July 31, 2026, were as follows:
|
|
Federated
Hermes
Government
Obligations
Fund,
Premier
Shares |
|
Value
as of 7/31/2025 |
$75,787,511
|
|
Purchases
at Cost |
$1,794,046,589
|
|
Proceeds
from Sales |
$(1,750,881,089)
|
|
Change
in Unrealized Appreciation/Depreciation |
$—
|
|
Net
Realized Gain/(Loss) |
$—
|
|
Value
as of 7/31/2026 |
$118,953,011
|
|
Shares
Held as of 7/31/2026 |
118,953,011
|
|
Dividend
Income |
$3,827,922
|
|
1
|
Non-income-producing
security. |
|
2
|
7-day
net yield. |
|
3
|
The
cost of investments for federal tax purposes amounts to $4,775,744,274. |
|
4
|
Assets,
other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Note: The categories of investments are
shown as a percentage of net assets at July 31, 2026.
Various inputs are used in determining the
value of the Fund’s investments. These inputs are summarized in the three broad levels listed
below:
Level 1—quoted prices in active markets
for identical securities.
Level 2—other significant observable
inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs
(including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing
securities are not an indication of the risk associated with investing in those securities.
At July 31, 2026, all investments of the
Fund utilized Level 1 inputs in valuing the Fund’s assets carried at fair value.
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
3
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$37.18
|
$30.74
|
$24.17
|
$23.32
|
$31.22
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.18)
|
(0.10)
|
(0.04)
|
0.01
|
(0.08)
|
|
Net
realized and unrealized gain (loss) |
3.95
|
7.76
|
7.02
|
3.59
|
(1.89)
|
|
Total
From Investment Operations |
3.77
|
7.66
|
6.98
|
3.60
|
(1.97)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(1.32)
|
(1.22)
|
(0.41)
|
(2.75)
|
(5.93)
|
|
Net
Asset Value, End of Period |
$39.63
|
$37.18
|
$30.74
|
$24.17
|
$23.32
|
|
Total
Return2
|
10.21%
|
25.16%
|
29.25%
|
18.56%
|
(8.93)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.00%
|
0.99%
|
0.99%
|
0.99%
|
0.99%
|
|
Net
investment income (loss) |
(0.47)%
|
(0.31)%
|
(0.15)%
|
0.03%
|
(0.30)%
|
|
Expense
waiver/reimbursement4
|
0.09%
|
0.12%
|
0.23%
|
0.29%
|
0.33%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$422,077
|
$377,688
|
$247,412
|
$146,478
|
$106,863
|
|
Portfolio
turnover5
|
100%
|
58%
|
58%
|
116%
|
147%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
4
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$27.38
|
$23.08
|
$18.38
|
$18.56
|
$26.16
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.35)
|
(0.26)
|
(0.18)
|
(0.12)
|
(0.23)
|
|
Net
realized and unrealized gain (loss) |
2.90
|
5.78
|
5.29
|
2.69
|
(1.44)
|
|
Total
From Investment Operations |
2.55
|
5.52
|
5.11
|
2.57
|
(1.67)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(1.32)
|
(1.22)
|
(0.41)
|
(2.75)
|
(5.93)
|
|
Net
Asset Value, End of Period |
$28.61
|
$27.38
|
$23.08
|
$18.38
|
$18.56
|
|
Total
Return2
|
9.39%
|
24.22%
|
28.27%
|
17.69%
|
(9.60)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.78%
|
1.74%
|
1.74%
|
1.74%
|
1.74%
|
|
Net
investment income (loss) |
(1.26)%
|
(1.06)%
|
(0.90)%
|
(0.73)%
|
(1.05)%
|
|
Expense
waiver/reimbursement4
|
0.06%
|
0.12%
|
0.23%
|
0.29%
|
0.33%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$69,569
|
$57,824
|
$33,774
|
$20,413
|
$14,743
|
|
Portfolio
turnover5
|
100%
|
58%
|
58%
|
116%
|
147%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
5
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$40.97
|
$33.68
|
$26.39
|
$25.13
|
$33.14
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.10)
|
(0.02)
|
0.03
|
0.06
|
(0.01)
|
|
Net
realized and unrealized gain (loss) |
4.37
|
8.53
|
7.67
|
3.95
|
(2.07)
|
|
Total
From Investment Operations |
4.27
|
8.51
|
7.70
|
4.01
|
(2.08)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
—
|
(0.00)2
|
(0.00)2
|
—
|
—
|
|
Distributions
from net realized gain |
(1.32)
|
(1.22)
|
(0.41)
|
(2.75)
|
(5.93)
|
|
Total
Distributions |
(1.32)
|
(1.22)
|
(0.41)
|
(2.75)
|
(5.93)
|
|
Net
Asset Value, End of Period |
$43.92
|
$40.97
|
$33.68
|
$26.39
|
$25.13
|
|
Total
Return3
|
10.49%
|
25.51%
|
29.54%
|
18.88%
|
(8.72)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses4
|
0.75%
|
0.74%
|
0.74%
|
0.74%
|
0.74%
|
|
Net
investment income (loss) |
(0.23)%
|
(0.06)%
|
0.09%
|
0.24%
|
(0.04)%
|
|
Expense
waiver/reimbursement5
|
0.10%
|
0.13%
|
0.24%
|
0.28%
|
0.33%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$4,516,876
|
$2,596,516
|
$1,226,156
|
$434,306
|
$74,192
|
|
Portfolio
turnover6
|
100%
|
58%
|
58%
|
116%
|
147%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Represents
less than $0.01. |
|
3
|
Based
on net asset value. |
|
4
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
5
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
6
Financial
Highlights–Class
R6 Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
|
Period
Ended
7/31/20241
| |
|
|
2026
|
2025
| |
|
Net Asset
Value, Beginning of Period |
$40.96
|
$33.68
|
$33.20
|
|
Income
From Investment Operations: |
|
|
|
|
Net
investment income (loss)2
|
(0.09)
|
(0.03)
|
(0.00)3
|
|
Net
realized and unrealized gain (loss) |
4.38
|
8.53
|
0.48
|
|
Total
From Investment Operations |
4.29
|
8.50
|
0.48
|
|
Less Distributions:
|
|
|
|
|
Distributions
from net investment income |
—
|
(0.00)3
|
—
|
|
Distributions
from net realized gain |
(1.32)
|
(1.22)
|
—
|
|
Total
Distributions |
(1.32)
|
(1.22)
|
—
|
|
Net
Asset Value, End of Period |
$43.93
|
$40.96
|
$33.68
|
|
Total
Return4
|
10.54%
|
25.48%
|
1.45%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
Net
expenses5
|
0.72%
|
0.71%
|
0.71%6
|
|
Net
investment income (loss) |
(0.20)%
|
(0.07)%
|
(0.00)%6,7
|
|
Expense
waiver/reimbursement8
|
0.05%
|
0.08%
|
0.25%6
|
|
Supplemental
Data: |
|
|
|
|
Net
assets, end of period (000 omitted) |
$602,445
|
$292,858
|
$51
|
|
Portfolio
turnover9
|
100%
|
58%
|
58%10
|
|
1
|
Reflects
operations for the period from May 29, 2024 (commencement of operations) to July 31, 2024. |
|
2
|
Per
share numbers have been calculated using the average shares method. |
|
3
|
Represents
less than $0.01. |
|
4
|
Based
on net asset value. Total returns for periods of less than one year are not annualized. |
|
5
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
6
|
Computed
on an annualized basis. |
|
7
|
Represents
less than 0.01%. |
|
8
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
9
|
Securities
that mature are considered sales for purposes of this calculation. |
|
10
|
Portfolio
turnover is calculated at the Fund level. Percentage indicated was calculated for the year ended July 31, 2024. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
7
Statement
of Assets and Liabilities
July 31, 2026
|
Assets:
|
|
|
Investment
in securities, at value including $118,953,011 of investments in affiliated holdings* (identified
cost $4,675,515,565, including
$118,953,011
of identified cost in affiliated holdings) |
$5,611,892,029
|
|
Income
receivable |
517,200
|
|
Income
receivable from affiliated holdings |
367,330
|
|
Receivable
for investments sold |
44,231,907
|
|
Receivable
for shares sold |
4,546,644
|
|
Total
Assets |
5,661,555,110
|
|
Liabilities:
|
|
|
Payable
for investments purchased |
45,163,475
|
|
Payable
for shares redeemed |
4,196,688
|
|
Payable
for investment adviser fee (Note 5)
|
88,265
|
|
Payable
for administrative fee (Note 5)
|
11,836
|
|
Payable
for Directors’/Trustees’ fees (Note 5)
|
4,140
|
|
Payable
for distribution services fee (Note 5)
|
44,874
|
|
Payable
for other service fees (Notes 2 and 5)
|
213,862
|
|
Accrued
expenses (Note 5)
|
864,337
|
|
Total
Liabilities |
50,587,477
|
|
Net
assets for 129,635,146 shares outstanding |
$5,610,967,633
|
|
Net Assets
Consist of: |
|
|
Paid-in
capital |
$4,444,006,317
|
|
Total
distributable earnings (loss) |
1,166,961,316
|
|
Net
Assets |
$5,610,967,633
|
|
Net Asset
Value, Offering Price and Redemption Proceeds Per Share: |
|
|
Class A
Shares: |
|
|
Net
asset value per share ($422,076,951 ÷ 10,649,222 shares outstanding), no par value, unlimited shares authorized |
$39.63
|
|
Offering
price per share (100/94.50 of $39.63) |
$41.94
|
|
Redemption
proceeds per share |
$39.63
|
|
Class C
Shares: |
|
|
Net
asset value per share ($69,569,314 ÷ 2,431,943 shares outstanding), no par value, unlimited shares authorized |
$28.61
|
|
Offering
price per share |
$28.61
|
|
Redemption
proceeds per share (99.00/100 of $28.61) |
$28.32
|
|
Institutional
Shares: |
|
|
Net
asset value per share ($4,516,876,301 ÷ 102,840,247 shares outstanding), no par value, unlimited shares authorized |
$43.92
|
|
Offering
price per share |
$43.92
|
|
Redemption
proceeds per share |
$43.92
|
|
Class R6
Shares: |
|
|
Net
asset value per share ($602,445,067 ÷ 13,713,734 shares outstanding), no par value, unlimited shares authorized |
$43.93
|
|
Offering
price per share |
$43.93
|
|
Redemption
proceeds per share |
$43.93
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
8
Statement
of Operations
Year Ended July 31,
2026
|
Investment
Income: |
|
|
Dividends
(including $3,827,922 received from affiliated holdings*) |
$23,860,430
|
|
Net
income on securities loaned (Note 2) |
534
|
|
TOTAL
INCOME |
23,860,964
|
|
Expenses:
|
|
|
Investment
adviser fee (Note 5)
|
29,753,886
|
|
Administrative
fee (Note 5)
|
3,536,540
|
|
Custodian
fees |
140,503
|
|
Transfer
agent fees (Note 2) |
3,895,766
|
|
Directors’/Trustees’
fees (Note 5)
|
20,564
|
|
Auditing
fees |
29,566
|
|
Legal
fees |
11,287
|
|
Portfolio
accounting fees |
206,700
|
|
Distribution
services fee (Note 5)
|
489,083
|
|
Other
service fees (Notes 2 and 5)
|
1,203,966
|
|
Share
registration costs |
728,087
|
|
Printing
and postage |
157,427
|
|
Miscellaneous
(Note 5)
|
41,140
|
|
TOTAL
EXPENSES |
40,214,515
|
|
Waiver
and Reimbursements: |
|
|
Waiver/reimbursement
of investment adviser fee (Note 5) |
(2,068,027)
|
|
Reimbursement
of other operating expenses (Notes 2 and 5) |
(2,209,883)
|
|
TOTAL
WAIVER AND REIMBURSEMENTS |
(4,277,910)
|
|
Net
expenses |
35,936,605
|
|
Net
investment income (loss) |
(12,075,641)
|
|
Realized
and Unrealized Gain (Loss) on Investments: |
|
|
Net
realized gain on investments |
280,059,622
|
|
Net
change in unrealized appreciation of investments |
182,832,516
|
|
Net
realized and unrealized gain (loss) on investments |
462,892,138
|
|
Change
in net assets resulting from operations |
$450,816,497
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
9
Statement
of Changes in Net Assets
|
Year
Ended July 31 |
2026
|
2025
|
|
Increase
(Decrease) in Net Assets |
|
|
|
Operations:
|
|
|
|
Net
investment loss |
$(12,075,641)
|
$(2,549,538)
|
|
Net
realized gain (loss) |
280,059,622
|
110,963,888
|
|
Net
change in unrealized appreciation/depreciation |
182,832,516
|
434,432,319
|
|
CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS |
450,816,497
|
542,846,669
|
|
Distributions
to Shareholders: |
|
|
|
Class
A Shares |
(14,208,251)
|
(10,758,500)
|
|
Class
C Shares |
(2,978,466)
|
(1,843,986)
|
|
Institutional
Shares |
(106,387,189)
|
(51,590,394)
|
|
Class
R6 Shares |
(12,076,674)
|
(2,518,561)
|
|
CHANGE
IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
(135,650,580)
|
(66,711,441)
|
|
Share Transactions:
|
|
|
|
Proceeds
from sale of shares |
3,258,367,349
|
1,962,504,301
|
|
Net
asset value of shares issued to shareholders in payment of distributions declared |
132,828,808
|
65,025,116
|
|
Cost
of shares redeemed |
(1,420,281,419)
|
(686,170,826)
|
|
CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
1,970,914,738
|
1,341,358,591
|
|
Change
in net assets |
2,286,080,655
|
1,817,493,819
|
|
Net Assets:
|
|
|
|
Beginning
of period |
3,324,886,978
|
1,507,393,159
|
|
End
of period |
$5,610,967,633
|
$3,324,886,978
|
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
10
Notes to
Financial Statements
July 31, 2026
1. ORGANIZATION
Federated Hermes MDT Series (the “Trust”)
is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end
management investment company. The Trust consists of five portfolios. The financial statements included herein are only those of
Federated Hermes MDT Large Cap Growth Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated
and a shareholder’s interest is limited to the portfolio in which shares
are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares, Institutional
Shares and Class R6 Shares. All shares of the Fund have equal
rights with respect to voting, except on class-specific matters. The investment
objective of the Fund is long-term capital appreciation.
2. SIGNIFICANT
ACCOUNTING POLICIES
The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its financial statements.
These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In
calculating its net asset value (NAV), the Fund generally values investments as follows:
■
Equity
securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official
closing price in their principal exchange or market.
■
Shares
of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share
practical expedient, as applicable.
■
For
securities that are fair valued in accordance with procedures established by and under the general supervision of Federated MDTA LLC
(the “Adviser”) certain factors may be considered, such as: the last traded or purchase price of the security, information
obtained by contacting the issuer or dealers, analysis of the
issuer’s financial statements or other available documents, fundamental analytical data,
the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public
trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors
including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation
or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain
price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth
in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion
of the Adviser’s valuation committee (“Valuation Committee”),
is deemed not representative of the fair value of such security, the Fund uses the
fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund
could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines
its NAV per share, and the actual value obtained could be materially different.
Fair Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Act, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s
valuation designee to perform any fair value determinations for
securities and other assets held by the Fund. The Adviser is subject to the Trustees’
oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the
Adviser’s fair value determinations.
The Adviser, acting through
its Valuation Committee, is responsible for determining the fair value of investments for which market quotations
are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated
companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use
pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The
Valuation Committee employs various methods for reviewing third-party
pricing-service evaluations including periodic reviews of third-party
pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional
back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on
recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee
determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review
the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant
events procedures as part of the Fund’s compliance program
and will review any changes made to the procedures.
Factors considered by
pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon,
maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers
and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an
investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price
between the prices bid and ask for the investment (a “mid”
evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities,
mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income
securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment,
the fair value of the investment is determined in accordance with procedures adopted by the Adviser.
Annual
Financial Statements and Additional Information
11
The
Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines
that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment
would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both
an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying
the resulting change in value. Examples of significant events
that may occur after the close of the principal market on which a security is traded,
or after the time of a price evaluation provided by a pricing service or a dealer, include:
■
With
respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities
index futures contracts;
■
Political
or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are
traded;
■
Announcements
concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s
operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby
the Valuation Committee uses a pricing service to provide factors to update the fair value of
equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the
pricing time of the Fund. For other significant events, the Fund
may seek to obtain more current quotations or price evaluations from alternative
pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the
investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations
made in response to significant events.
Repurchase Agreements
The
Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to
a repurchase agreement to transfer to the Fund’s custodian
or sub-custodian eligible securities or cash with a market value (after transaction
costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred
to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control”
as those terms are defined in the Uniform Commercial Code. Certain
repurchase agreements may be structured as loans secured by a security
interest or lien on the eligible securities. The Fund has established procedures for monitoring the market value of the transferred securities
and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also
allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase
price or in exchange for other eligible securities of equivalent market value.
The insolvency of the
other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause
the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund
in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into
repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the
custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund
will participate on a pro rata basis with the other investment
companies and clients in its share of the securities transferred under such repurchase
agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment
transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an
identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Foreign dividends are recorded on the
ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions
of net investment income and capital gains, if any, are declared and paid at least annually. Non-cash dividends included in dividend
income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment
income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average
daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense
waiver and reimbursements of $4,277,910 is disclosed in various locations in this Note 2 and Note 5.
Dividends are declared
separately for each class. No class has preferential dividend rights; differences in per share dividend rates are generally
due to differences in separate class expenses.
Transfer Agent Fees
For
the year ended July 31, 2026, transfer agent fees for the Fund were as follows:
|
|
Transfer
Agent
Fees
Incurred |
Transfer
Agent
Fees
Reimbursed |
|
Class
A Shares |
$348,013
|
$(184,352)
|
|
Class
C Shares |
55,849
|
(8,183)
|
|
Institutional
Shares |
3,451,641
|
(2,017,348)
|
|
Class
R6 Shares |
40,263
|
—
|
|
TOTAL
|
$3,895,766
|
$(2,209,883)
|
Other Service Fees
The
Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial
intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder
accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service
fees.
Annual
Financial Statements and Additional Information
12
For
the year ended July 31, 2026, other service fees for the Fund were as follows:
|
|
Other
Service
Fees
Incurred |
|
Class
A Shares |
$1,040,938
|
|
Class
C Shares |
163,028
|
|
TOTAL
|
$1,203,966
|
Federal Taxes
It
is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 and to distribute to shareholders
each year substantially all of its income. Accordingly, no provision
for federal income tax is necessary. As of and during the year ended July
31, 2026, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related
to tax liabilities as income tax expense in the Statement of Operations.
As of July 31, 2026, tax years 2023 through 2026 remain subject to
examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of
Massachusetts.
When-Issued and Delayed-Delivery Transactions
The
Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased
on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the
contract.
Securities Lending
The
Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the
loans within the program is one year or less. The Fund receives
cash collateral for securities loaned, which generally is invested in an affiliated
money market fund. Collateral is maintained at a minimum level of 100% of the fair value of investments loaned, plus interest, if applicable.
In accordance with the Fund’s securities lending agreement, the fair value of securities on loan is determined each day at the close
of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business
day. Earnings from collateral invested in affiliated holdings as presented parenthetically on the Statement of Operations do not reflect
fees and rebates and are allocated between the borrower of the security, the securities lending agent, as a fee for its services under
the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on
loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are
deemed to be material by the Adviser. There can be no assurance
that the Fund will have sufficient notice of such matters to be able to terminate
the loan in time to vote thereon.
As of July 31, 2026, the Fund had no outstanding
securities on loan.
Other
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from
those estimated. The Fund applies investment company accounting
and reporting guidance.
3. SHARES
OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
A Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
2,938,347
|
$111,519,269
|
3,564,650
|
$118,820,792
|
|
Shares
issued to shareholders in payment of distributions declared |
322,663
|
12,548,370
|
274,820
|
9,588,443
|
|
Shares
redeemed |
(2,770,195)
|
(105,996,409)
|
(1,730,794)
|
(56,979,494)
|
|
NET
CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
490,815
|
$18,071,230
|
2,108,676
|
$71,429,741
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
C Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
551,136
|
$15,334,282
|
967,438
|
$23,876,019
|
|
Shares
issued to shareholders in payment of distributions declared |
104,126
|
2,937,389
|
71,348
|
1,842,208
|
|
Shares
redeemed |
(335,030)
|
(9,352,742)
|
(390,653)
|
(9,576,278)
|
|
NET
CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
320,232
|
$8,918,929
|
648,133
|
$16,141,949
|
Annual
Financial Statements and Additional Information
13
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Institutional
Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
64,662,645
|
$2,740,331,118
|
41,771,376
|
$1,530,445,641
|
|
Shares
issued to shareholders in payment of distributions declared |
2,447,523
|
105,316,925
|
1,330,945
|
51,077,740
|
|
Shares
redeemed |
(27,648,390)
|
(1,181,454,855)
|
(16,128,071)
|
(593,713,926)
|
|
NET
CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
39,461,778
|
$1,664,193,188
|
26,974,250
|
$987,809,455
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
R6 Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
9,227,151
|
$391,182,680
|
7,778,144
|
$289,361,849
|
|
Shares
issued to shareholders in payment of distributions declared |
279,482
|
12,026,124
|
65,580
|
2,516,725
|
|
Shares
redeemed |
(2,942,020)
|
(123,477,413)
|
(696,109)
|
(25,901,128)
|
|
NET
CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS |
6,564,613
|
$279,731,391
|
7,147,615
|
$265,977,446
|
|
NET
CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS |
46,837,438
|
$1,970,914,738
|
36,878,674
|
$1,341,358,591
|
4. FEDERAL
TAX INFORMATION
The tax character of distributions as reported
on the Statement of Changes in Net Assets for the years ended July 31, 2026 and 2025,
was as follows:
|
|
2026
|
2025
|
|
Ordinary
income |
$—
|
$119,787
|
|
Long-term
capital gains |
$135,650,580
|
$66,591,654
|
As of July 31, 2026, the components of distributable
earnings on a tax-basis were as follows:
|
Net
unrealized appreciation |
$836,147,755
|
|
Undistributed
long-term capital gains |
$384,950,709
|
|
Capital
loss deferrals |
$(54,137,148)
|
|
TOTAL
|
$1,166,961,316
|
At July 31, 2026, the cost of investments
for federal tax purposes was $4,775,744,274. The net unrealized appreciation of investments for
federal tax purposes was $836,147,755. This consists of unrealized appreciation from investments for those securities having an excess
of value over cost of $1,070,290,358 and unrealized depreciation from investments for those securities having an excess of cost over
value of $234,142,603. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments
for wash sales.
Under current tax rules,
a late-year ordinary loss may be deferred, in whole or in part, and treated as occurring on the first day of the following
fiscal year. As of July 31, 2026, for federal income tax purposes, a late year ordinary loss of $54,137,148 was deferred to August
1, 2026.
5. INVESTMENT
ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The
advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.65% of the Fund’s average daily net assets.
Prior to October 1, 2024, the Fund’s investment adviser fee was 0.75% of the Fund’s average daily net assets. Subject to the
terms described in the Expense Limitation note, the Adviser may
voluntarily choose to waive any portion of its fee and/or reimburse certain
operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate,
to maintain positive or zero net yields. For the year ended July 31, 2026, the Adviser voluntarily waived $1,994,528 of its fee and
voluntarily reimbursed $2,209,883 of transfer agent fees.
The Adviser has agreed
to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment
companies. For the year ended July 31, 2026, the Adviser reimbursed $73,499.
Annual
Financial Statements and Additional Information
14
Administrative Fee
Federated
Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and
services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated
Hermes Funds subject to a fee under the Administrative Services
Agreement. The fee paid to FAS is based on the average daily net assets
of the Investment Complex as specified below:
|
Administrative
Fee |
Average
Daily Net Assets
of
the Investment Complex |
|
0.100%
|
on
assets up to $50 billion |
|
0.075%
|
on
assets over $50 billion |
Subject to the terms described in the Expense
Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, the annualized fee paid to FAS was 0.077% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket
expenses to the Fund.
Distribution Services Fee
The
Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will compensate Federated Securities Corp. (FSC), the principal
distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares
to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses
at the following percentages of average daily net assets annually,
to compensate FSC:
|
|
Percentage
of Average Daily
Net
Assets of Class |
|
Class
A Shares |
0.05%
|
|
Class
C Shares |
0.75%
|
Subject to the terms described in the Expense
Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, distribution services fees for the Fund were as follows:
|
|
Distribution
Services
Fees
Incurred |
|
Class
C Shares |
$489,083
|
When FSC receives fees, it may pay some
or all of them to financial intermediaries whose customers purchase shares. For the year ended July
31, 2026, FSC retained $127,359 of fees paid by the Fund. For the year ended July 31, 2026, the Fund’s Class A Shares did not incur
a distribution services fee; however, it may begin to incur this
fee upon approval of the Trustees.
Sales Charges
Front-end
sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended
July 31, 2026, FSC retained $67,040 in sales charges from the sale of Class A Shares. FSC also retained $1,340 of CDSC relating to
redemptions of Class A Shares and $8,790 relating to redemptions of Class C Shares, respectively.
Other Service Fees
For
the year ended July 31, 2026, FSSC received $50,696 of the other service fees disclosed in Note 2.
Expense Limitation
The
Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Effective October 1, 2026, total annual fund operating expenses (as shown in
the financial highlights, excluding interest expense, extraordinary expenses and proxy-related expenses, if any) paid by the Fund’s
Class A Shares, Class C Shares, Institutional Shares and Class
R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed
1.00%, 1.80%, 0.75% and 0.72% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination
Date”): (a) October 1, 2027; or (b) the date of the Fund’s
next effective Prospectus. Prior to October 1, 2026, the Fee Limit for the Class C Shares was
1.79%. While the Adviser and its applicable affiliates currently do not anticipate terminating or increasing these arrangements prior
to the Termination Date, these arrangements may only be terminated
or the Fee Limit increased prior to the Termination Date with the approval
of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain
Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate
payment, Independent Directors’/Trustees’ fees and
certain expenses related to conducting meetings of the Directors/Trustees and other
miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related
to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous
Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
Annual
Financial Statements and Additional Information
15
6. INVESTMENT
TRANSACTIONS
Purchases and sales of investments, excluding
long-term U.S. government securities and short-term obligations, for the year ended July
31, 2026, were as follows:
|
Purchases
|
$6,291,986,610
|
|
Sales
|
$4,504,313,191
|
7. CONCENTRATION
OF RISK
The Fund may invest a portion of its assets
in securities of companies that are deemed by the Fund’s management to be classified in similar
business sectors. Economic developments may have an effect on the liquidity and volatility of the portfolio securities.
A substantial part of
the Fund’s portfolio may be comprised of entities in the Information Technology sector. As a result, the Fund may be
more susceptible to any economic, business, political or other developments which generally affect these entities.
8. LINE
OF CREDIT
The Fund participates with certain other
Federated Hermes Funds, on a several basis, in an up to $400,000,000 unsecured, 364-day, committed,
revolving line of credit (LOC) agreement dated June 16, 2026. The LOC was made available to temporarily finance the repurchase
or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary
or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s
ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied
before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on
any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and
(iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under
the LOC pays its pro rata share of a commitment fee based on the amount of
the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2026, the Fund had no outstanding
loans. During the year ended July 31, 2026, the Fund did not utilize the LOC.
9. INTERFUND
LENDING
Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries
of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility
allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2026, there were no outstanding loans. During
the year ended July 31, 2026, the program was not utilized.
10. OPERATING
SEGMENTS
An operating segment is defined as a component
of a public entity that engages in business activities from which it may recognize revenues
and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM)
to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. A management committee of the Adviser acts as the CODM. The Fund represents a single operating segment, as the
CODM monitors the operating results of the Fund as a whole and the strategic asset allocation is determined based on the investment
objective of the Fund and executed by the Fund’s portfolio management team. The financial information in the form of the Fund’s
portfolio composition, total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations,
subscriptions and redemptions) which is reviewed by the CODM to assess the Fund’s performance in comparison to the Fund’s
benchmarks and to make resource allocation decisions for the Fund’s single segment is consistent with the information presented
in these financial statements. Segment assets are reflected on
the accompanying Statement of Assets and Liabilities as “total assets” and significant
segment expenses are listed on the accompanying Statement of Operations.
11. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties to the Fund). In addition,
in the normal course of business, the Fund provides certain indemnifications under
arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into
by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to
the arrangement, provided the third party’s actions are
not deemed to have breached an agreed-upon standard of care (such as willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund
does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss
to be remote.
12. FEDERAL
TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2026, the amount
of long-term capital gains designated by the Fund was $135,650,580.
Annual
Financial Statements and Additional Information
16
Report of
Independent Registered Public Accounting Firm
TO THE SHAREHOLDERS AND THE
BOARD OF TRUSTEES OF FEDERATED HERMES MDT LARGE CAP GROWTH
FUND:
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of Federated Hermes MDT Large Cap Growth Fund (the
“Fund”) (one of the portfolios constituting Federated Hermes MDT Series (the “Trust”)), including the portfolio
of investments, as of July 31, 2026, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period
then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated
Hermes MDT Series) at July 31, 2026, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are
the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2026, by correspondence with the custodian, brokers, and others; when replies
were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor
of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2026
September 23, 2026
Annual
Financial Statements and Additional Information
17
Evaluation
and Approval of Advisory Contract–May
2026
Federated Hermes MDT Large
Cap Growth Fund (the “Fund”)
At its meetings in May 2026 (the
“May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who
are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the
“Independent Trustees ”), reviewed and unanimously approved the continuation of the investment advisory contract between
the Fund and Federated MDTA LLC (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s
determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering
such information deemed necessary to evaluate the terms of the Contract and to approve the continuation of the
existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized
below.
Information Received
and Review Process
At the request
of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance
of its May Meetings an independent written report regarding data related to the Fund’s management fee (the
“CCO Management Fee Report”). The Board considered the CCO Management Fee Report, along with other information,
in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation
of the Contract.
In addition
to the CCO Management Fee Report, the Board considered information specifically prepared in connection with
the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding
the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the
Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent
legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized
below. The Board also considered such additional matters as the Independent Trustees deemed reasonably necessary
to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the
Board at its meetings throughout the year.
The Board’s
consideration of the Contract included review of materials and information covering the following matters, among
others: (1) a copy of the Contract; (2) the nature, quality and extent of the advisory and other services provided to the
Fund by Federated Hermes; (3) Federated Hermes’ business and operations; (4) the Adviser’s investment philosophy, personnel
and processes; (5) the Fund’s investment objective and strategies; (6) the Fund’s short-term and long-term performance
- in absolute terms (both on a gross basis and net of expenses) and relative to an appropriate group of peer funds
and its benchmark; (7) the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the
Fund - in absolute terms and relative to an appropriate group of peer funds, with due regard for contractual or voluntary
expense limitations (if any); (8) the financial condition of Federated Hermes; (9) the Adviser’s profitability with respect
to managing the Fund; (10) distribution and sales activity for the Fund; and (11) the use and allocation of brokerage
commissions derived from trading the Fund’s portfolio securities (if any).
The Board
also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered
funds in evaluating the Contract. Using these judicial decisions as a guide, the Board considered several factors it
deemed relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund, including: (1) the nature
and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the
fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser
of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the
fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its
shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with
the fund, including research services received from
brokers that execute fund trades and any fees paid to affiliates of the adviser
for services rendered to the fund; (5) comparative fees and expenses, including a comparison of management fees paid
to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees
charged to institutional and other advisory clients of the same adviser for what might be viewed as like services; and (6)
the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their
expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the
adviser’s services and fees. The Board considered that the Securities and Exchange Commission (“SEC”) disclosure requirements
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with
the factors listed above. The Board was guided by these factors in its evaluation of the Contract to the extent it considered
them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors
in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters
relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively,
the “Federated Hermes Funds”).
Annual
Financial Statements and Additional Information
18
In
addition, the Board considered the preferences and expectations of Fund shareholders and the potential disruptions of the
Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate
or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund
based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes
will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there are a range
of investment options available to the Fund’s shareholders in the marketplace, and such shareholders, having had the opportunity
to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the
Fund.
In determining
to approve the continuation of the Contract, the members of the Board reviewed and evaluated information
and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment.
While individual members of the Board may have weighed certain factors differently, the Board’s determination
to approve the continuation of the Contract was based on a comprehensive consideration of all information provided
to the Board throughout the year. The Board recognized that its evaluation process is evolutionary and that the factors
considered and the emphasis placed on relevant factors may change in recognition of changing circumstances in the
registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal
counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive
session with their independent legal counsel and without management present to review the relevant materials and
consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes
also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations
furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as
part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made
on a fund-by-fund basis.
Nature, Extent and
Quality of Services
The Board
considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources
of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the
Contract and the full range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel,
investment philosophy and process, investment research capabilities and resources, trade operations capabilities,
experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities
of the portfolio management team primarily responsible for the day-to-day management of the Fund and evaluated
Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board
considered the trading operations by the Adviser, including the execution of portfolio transactions and the selection of
brokers for those transactions. The Board also considered the Adviser’s ability to deliver competitive investment performance
for the Fund when compared to the Fund’s Performance Peer Group (as defined below).
In addition,
the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to
consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational
enhancements that are designed to benefit the Federated Hermes Funds. The Board considered Federated Hermes’
oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted
the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered
the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests
made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes
is responsible for providing the Federated Hermes Funds’ officers.
The Board
received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The
Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated
Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any
compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated
Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes
in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended,
including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The
Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes
Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and
policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led,
and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard. In addition, the Board noted
Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for
and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service
providers operate.
Annual
Financial Statements and Additional Information
19
The
Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive
array of funds with different investment objectives, policies and strategies. The Board considered the expenses
that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in
sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted
the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to
exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on
these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services
provided by the Adviser to the Fund.
Fund Investment Performance
The Board
considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board
considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered
detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods
that were provided to the Board throughout the year and in connection with the May Meetings. These reports included,
among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared
to one or more relevant categories or groups of peer funds and the Fund’s benchmark, performance attribution information
and commentary on the effect of market conditions. The Board noted that it evaluated investment performance at
meetings throughout the year and received reports from Federated Hermes regarding the performance of certain Federated
Hermes Funds as well as Federated Hermes’ explanations for less favorable performance and any specific actions
Federated Hermes had taken, or had determined to take, to seek to enhance Fund investment performance and the results
of those actions.
The Board
also reviewed comparative information regarding the performance of other registered funds in the category of
peer funds selected by Morningstar, Inc. (“Morningstar”), an independent fund ranking organization (the “Performance
Peer Group”). The Board noted the CCO’s
statement that comparisons to fund peer groups may be helpful, though not conclusive,
in evaluating the performance of the Adviser in managing the Fund. The Board also considered a report comparing
the performance of the Fund solely to other funds with a quantitative focus in the Performance Peer Group.
The Board
also considered comparative performance data from Lipper, Inc. that was included in reports provided to the Board
throughout the year.
The Board
considered that for the one-year, three-year and five-year periods ended December 31, 2025, the Fund’s performance
was above the median of the Performance Peer Group. In addition, the Board was informed by the Adviser that,
for the same periods, the Fund outperformed its benchmark for the five-year period.
Based on
these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities
to manage the Fund.
Fund Expenses
The Board
considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information
that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and
considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each
element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting
fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from
the overall category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board received a description
of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also
reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar
category.
While mindful
that courts have cautioned against giving too much weight to comparative information concerning fees charged
to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board
in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds more
heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The
Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained
by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore,
appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund
competes.
The Board
reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position
of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory
fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements,
and that the overall expense structure of the Fund remained competitive in the context of other factors
Annual
Financial Statements and Additional Information
20
considered
by the Board. In this regard, the Board considered that, while comparisons to the Fund’s Expense Peer Group are
relevant in judging the reasonableness of advisory fees, the quantitative focus of the management of the Fund makes fee
and expense comparisons to the Expense Peer Group particularly difficult. The Board further considered that, although the
Fund’s advisory fee was above the median of the Expense Peer Group, the funds in the Expense Peer Group varied widely
in terms of the complexity of their management, and the management of the Fund is among the more complex funds
relative to the Expense Peer Group. In considering the Fund’s expenses, the Board noted that the Adviser recommended,
and the Board approved, a contractual advisory fee reduction for the Fund by 10 basis points, effective October
1, 2024.
The Board
also received and considered information about the nature and extent of services offered and fees charged by Federated
Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including
non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for
which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s statement that non-registered fund clients
are inherently different products due to the following differences, among others: (i) types of targeted investors; (ii)
applicable laws and regulations; (iii) legal structures; (iv) average account sizes; (v) portfolio management techniques made
necessary by different cash flows and different associated costs; (vi) the time spent by portfolio managers and their teams
(among other personnel across various departments, including legal, compliance and risk management) in reviewing securities
pricing; (vii) SEC mandated risk management programs with respect to fund liquidity and use of derivatives; (viii)
questions on regulatory reporting; (ix) a variety of different administrative responsibilities; and (x) degrees of risk associated
with management. The Board also considered information regarding the differences in the nature of the services required
for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as
a sub-adviser to another institution’s registered fund, noting the CCO’s statement that Federated Hermes generally performs
significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes
Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO emphasized
that differences in fees for providing advisory services to other types of clients may not be appropriate when judging
the appropriateness of the Federated Hermes Funds’ advisory fees because of the different services provided.
Based on
these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction
with other matters considered, are reasonable in light of the services provided.
Profitability
The Board
received and considered profitability information furnished by Federated Hermes. Such profitability information
included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund
basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered
the CCO’s statement that, while the cost allocation report applies consistent allocation processes for purposes of
general comparison of funds, the inherent difficulties in arbitrarily allocating costs lack precision and may cause the report
to be unreliable because a single change in an allocation estimate can dramatically alter the resulting estimate of cost
and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered
the CCO’s statement that the allocation methodologies used by Federated Hermes in estimating profitability for purposes
of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies
previously reviewed by an independent consultant. The Board noted that the independent consultant had previously
conducted a review of the allocation methodologies and reported to the Board that, although there is no single best
method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s
statement that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation
to the services provided.
The Board
also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly-held
fund management companies, including information regarding profitability trends over time. The Board recognized
that profitability comparisons among fund management companies are difficult because of the variation in the type
of comparative information that is publicly available, and the profitability of any fund management company is affected
by numerous factors. The Board considered the CCO’s statement that, based on such profitability information, Federated
Hermes’ profit margins did not appear to be excessive and that Federated Hermes appeared financially sound, with
the resources available to fulfill its contractual obligations.
Economies of Scale
The Board
received and considered information about the notion of possible realization of “economies of scale” as a fund
grows larger, the difficulties of isolating and quantifying economies of scale at an individual fund level, and the extent
to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes
has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio
management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity
and information security programs; internal audit and risk management functions; and technology, systems
Annual
Financial Statements and Additional Information
21
capabilities
and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed
to provide enhanced or expanded services to the Federated Hermes Funds and their shareholders. The Board considered
that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole.
In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies
of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes
Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in
the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds
and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future.
The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds
in recent years, which has resulted in benefits being realized by shareholders.
The Board
also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments)
that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered
that Federated Hermes believes that this information is relevant to consider whether Federated Hermes had an incentive
to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating
the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines
on economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring
fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board
considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes
derived from its relationships with the Federated Hermes Funds. The Board considered that Federated Hermes may
derive a benefit to its reputation as an adviser to the Fund, which may help in attracting other clients and investment personnel.
The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory
contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds
under separate service contracts, including for serving as the Federated Hermes Funds’ administrator and distributor.
In this regard, the Board considered that Federated Hermes’ affiliates provide distribution and shareholder services
to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant
to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any,
that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the
Federated Hermes Funds.
Conclusions
The Board
considered the CCO’s presentation and statements and the information accompanying the CCO Management Fee
Report. The Board recognized that its evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements
is a continuing and ongoing process that is informed by the information that the Board requests and receives from
management throughout the course of the year.
On the basis
of the information and factors summarized above, among other information and factors deemed relevant by the
Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation
of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances
and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations
identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them
to be determinative.
Annual
Financial Statements and Additional Information
22
Mutual funds are not
bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Investment in mutual funds involves investment risk, including the possible loss of principal.
This information is authorized
for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus,
which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes MDT Large Cap Growth Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31421R700
CUSIP 31421R809
CUSIP 31421R882
CUSIP 31425E101
CUSIP 31421R809
CUSIP 31421R882
CUSIP 31425E101
37329 (9/26)
©
2026 Federated Hermes, Inc.
Annual Financial Statements
and Additional Information
and Additional Information
July 31, 2026
|
Share
Class | Ticker
|
A
| QASCX
|
C | QCSCX
|
Institutional | QISCX
|
R6 | QLSCX
|
Federated Hermes MDT Small Cap Core Fund
A Portfolio of Federated Hermes MDT Series
Not FDIC Insured ▪ May
Lose Value ▪ No Bank Guarantee
CONTENTS
Portfolio
of Investments
July 31, 2026
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—97.6% |
|
|
|
|
Communication
Services—1.6% |
|
|
1,231,205
|
1
|
Bumble,
Inc. |
$ 3,508,934
|
|
248,718
|
1,2
|
Grindr,
Inc. |
4,312,770
|
|
1,142,534
|
1
|
Lumen
Technologies, Inc. |
7,289,367
|
|
150,706
|
1
|
Sphere
Entertainment Co. |
21,588,635
|
|
|
|
TOTAL
|
36,699,706
|
|
|
|
Consumer
Discretionary—8.7% |
|
|
26,347
|
1
|
Abercrombie
& Fitch Co., Class A |
2,622,580
|
|
358,404
|
1
|
Adient
PLC |
7,540,820
|
|
134,170
|
|
Advance
Auto Parts, Inc. |
7,451,802
|
|
146,379
|
|
American
Eagle Outfitters, Inc. |
2,514,791
|
|
548,334
|
|
Arko
Corp. |
4,381,189
|
|
1,835,687
|
1,2
|
Bed
Bath & Beyond, Inc. |
9,270,219
|
|
935,970
|
|
Bloomin
Brands, Inc. |
8,105,500
|
|
126,770
|
|
Caleres,
Inc. |
1,627,727
|
|
228,701
|
1
|
Capri
Holdings Ltd. |
3,643,207
|
|
1,682,491
|
1
|
Coursera,
Inc. |
8,934,027
|
|
295,807
|
2
|
Cracker
Barrel Old Country Store, Inc. |
16,680,557
|
|
364,687
|
2
|
Ermenegildo
Zegna Holditalia SpA |
5,364,546
|
|
716,157
|
1,2
|
EVgo,
Inc. |
1,131,528
|
|
298,621
|
1
|
FIGS,
Inc. |
3,195,245
|
|
87,180
|
1
|
Frontdoor,
Inc. |
6,331,883
|
|
466,111
|
1
|
Garrett
Motion, Inc. |
14,519,358
|
|
203,106
|
1
|
Helen
of Troy Ltd. |
5,611,819
|
|
312,742
|
|
Kohl’s
Corp. |
5,985,882
|
|
1,023,519
|
1
|
Krispy
Kreme, Inc. |
3,254,790
|
|
363,998
|
1
|
Lindblad
Expeditions Holdings, Inc. |
10,767,061
|
|
343,359
|
1
|
Navan,
Inc. |
9,140,217
|
|
309,609
|
1
|
Pattern
Group, Inc. |
7,127,199
|
|
87,497
|
|
Phinia,
Inc. |
6,438,904
|
|
91,722
|
|
Polaris,
Inc., Class A |
6,152,712
|
|
68,521
|
1
|
Revolve
Group, Inc. |
1,720,562
|
|
181,411
|
1
|
Rush
Street Interactive, Inc. |
4,881,770
|
|
936,565
|
1
|
Stoneridge,
Inc. |
6,471,664
|
|
462,704
|
|
Super
Group SGHC Ltd. |
6,477,856
|
|
1,293,852
|
1
|
Sweetgreen,
Inc. |
8,345,345
|
|
46,510
|
1
|
Victoria’s
Secret & Co. |
4,124,507
|
|
306,786
|
|
Wolverine
World Wide, Inc. |
6,037,549
|
|
|
|
TOTAL
|
195,852,816
|
|
|
|
Consumer
Staples—1.3% |
|
|
357,297
|
1
|
Bellring
Brands, Inc. |
4,426,910
|
|
553,882
|
|
MGP
Ingredients, Inc. |
9,803,711
|
|
825,820
|
1
|
The
Simply Good Foods Co. |
8,406,848
|
|
43,064
|
1
|
United
Natural Foods, Inc. |
2,188,943
|
|
369,840
|
1,2
|
Vital
Farms, Inc. |
4,708,063
|
|
|
|
TOTAL
|
29,534,475
|
|
|
|
Energy—5.2%
|
|
|
245,160
|
|
Ardmore
Shipping Corp. |
4,263,332
|
|
119,472
|
1
|
Calumet,
Inc. |
5,279,468
|
|
376,444
|
1
|
CNX
Resources Corp. |
13,476,695
|
Annual
Financial Statements and Additional Information
1
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Energy—continued
|
|
|
129,540
|
|
Crescent
Energy Co. |
$ 1,485,824
|
|
160,532
|
|
Delek
US Holdings, Inc. |
10,895,307
|
|
89,898
|
1
|
Dorian
LPG Ltd. |
4,262,963
|
|
126,165
|
2
|
FLEX
LNG Ltd. |
3,937,610
|
|
259,593
|
1
|
Green
Plains, Inc. |
4,374,142
|
|
85,504
|
|
International
Seaways, Inc. |
8,223,775
|
|
178,893
|
|
Kodiak
Gas Services, Inc. |
10,502,808
|
|
158,204
|
|
Murphy
Oil Corp. |
6,287,027
|
|
51,605
|
1
|
Nabors
Industries Ltd. |
4,421,000
|
|
63,067
|
1
|
Oceaneering
International, Inc. |
3,076,408
|
|
518,488
|
1
|
Oil
States International, Inc. |
4,204,938
|
|
118,146
|
|
PBF
Energy, Inc. |
8,539,593
|
|
127,030
|
|
Peabody
Energy Corp. |
2,708,280
|
|
770,741
|
1
|
Talos
Energy, Inc. |
11,699,848
|
|
121,505
|
1
|
Tidewater,
Inc. |
9,120,165
|
|
|
|
TOTAL
|
116,759,183
|
|
|
|
Financials—20.4%
|
|
|
176,234
|
|
Acadian
Asset Management, Inc. |
15,242,479
|
|
135,047
|
|
Alerus
Financial Corp. |
4,493,014
|
|
220,056
|
|
Amalgamated
Financial Corp. |
10,866,365
|
|
338,276
|
|
Artisan
Partners Asset Management, Inc. |
13,273,950
|
|
903,163
|
|
Associated
Banc-Corp. |
27,889,673
|
|
321,841
|
|
BankUnited,
Inc. |
15,013,883
|
|
70,789
|
|
Bladex,
Inc., Class E |
4,144,696
|
|
1,006,066
|
|
BrightSpire
Capital, Inc. |
5,040,391
|
|
682,710
|
|
Byline
Bancorp, Inc. |
26,810,022
|
|
355,839
|
|
CNO
Financial Group, Inc. |
19,603,171
|
|
126,495
|
1
|
Customers
Bancorp, Inc. |
9,952,627
|
|
286,072
|
|
FB
Financial Corp. |
17,273,027
|
|
39,403
|
|
First
Business Financial Services, Inc. |
2,766,485
|
|
287,775
|
|
First
Financial Bancorp |
9,735,428
|
|
753,160
|
|
Flagstar
Bank, N.A. |
10,709,935
|
|
81,071
|
1
|
Flywire
Corp. |
1,297,947
|
|
200,036
|
|
Fulton
Financial Corp. |
4,866,876
|
|
598,074
|
1
|
Hamilton
Insurance Group Ltd. |
21,506,741
|
|
64,539
|
|
Hancock
Whitney Corp. |
4,969,503
|
|
263,929
|
1
|
Happen,
Inc. |
5,051,601
|
|
24,586
|
|
HCI
Group, Inc. |
4,302,796
|
|
38,552
|
|
Hometrust
Bancshares, Inc. |
1,973,477
|
|
127,555
|
|
Independent
Bank Corp./MI |
4,872,601
|
|
115,077
|
|
Jackson
Financial, Inc. |
14,071,616
|
|
45,955
|
1
|
Lemonade,
Inc. |
2,220,086
|
|
95,473
|
1
|
LendingTree,
Inc. |
3,041,770
|
|
83,799
|
|
Marex
Group Ltd. |
5,440,231
|
|
145,559
|
|
Mercury
General Corp. |
15,592,280
|
|
211,161
|
|
OFG
Bancorp |
11,161,970
|
|
134,593
|
1
|
Oscar
Health, Inc. |
4,201,993
|
|
47,536
|
1
|
Palomar
Holdings, Inc. |
6,359,841
|
|
56,636
|
|
Peapack-Gladstone
Financial Corp. |
2,604,123
|
|
174,376
|
1
|
Pelagos
Insurance Capital Ltd. |
4,409,969
|
|
27,694
|
|
Preferred
Bank Los Angeles, CA |
2,892,361
|
|
95,810
|
|
QCR
Holdings, Inc. |
9,863,640
|
Annual
Financial Statements and Additional Information
2
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Financials—continued
|
|
|
141,046
|
|
Renasant
Corp. |
$ 6,145,374
|
|
404,575
|
1
|
Siriuspoint
Ltd. |
9,568,199
|
|
249,311
|
1
|
Skyward
Specialty Insurance Group, Inc. |
14,946,194
|
|
962,594
|
1
|
Slide
Insurance Holdings, Inc. |
19,223,002
|
|
94,426
|
|
Texas
Capital Bancshares, Inc. |
9,334,010
|
|
346,977
|
|
The
Bank of NT Butterfield & Son Ltd. |
21,266,220
|
|
370,070
|
|
Trustmark
Corp. |
17,559,822
|
|
84,876
|
|
UMB
Financial Corp. |
12,368,980
|
|
135,295
|
|
United
Bankshares, Inc. |
6,555,043
|
|
250,837
|
|
United
Community Banks, Inc. |
8,889,663
|
|
59,348
|
|
Universal
Insurance Holdings, Inc. |
2,594,101
|
|
305,052
|
|
Valley
National Bancorp |
4,359,193
|
|
138,739
|
|
Western
New England Bancorp, Inc. |
1,793,895
|
|
|
|
TOTAL
|
458,120,264
|
|
|
|
Health
Care—20.0% |
|
|
209,243
|
1
|
4D
Molecular Therapeutics, Inc. |
2,130,094
|
|
462,788
|
1
|
ADMA
Biologics, Inc. |
3,915,186
|
|
113,958
|
1
|
Alkermes
PLC |
5,582,802
|
|
198,740
|
1
|
AMN
Healthcare Services, Inc. |
6,683,626
|
|
127,704
|
1
|
AnaptysBio,
Inc. |
6,814,285
|
|
2,105,701
|
1,2
|
Anavex
Life Sciences Corp. |
5,790,678
|
|
1,389,112
|
1,2
|
Aquestive
Therapeutics, Inc. |
5,132,769
|
|
417,222
|
1
|
Arcutis
Biotherapeutics, Inc. |
11,206,583
|
|
561,301
|
1
|
Arvinas,
Inc. |
4,507,247
|
|
126,833
|
1
|
Aveanna
Healthcare Holdings, Inc. |
1,190,962
|
|
70,303
|
1
|
Axsome
Therapeutics, Inc. |
15,325,351
|
|
167,498
|
1
|
Azenta,
Inc. |
4,711,719
|
|
136,495
|
1
|
Bridgebio
Pharma, Inc. |
10,931,885
|
|
451,097
|
1
|
BrightSpring
Health Services, Inc. |
26,935,002
|
|
109,509
|
1
|
Brookdale
Senior Living, Inc. |
1,598,831
|
|
133,323
|
1
|
CG
Oncology, Inc. |
9,491,264
|
|
159,790
|
1
|
Cogent
Biosciences, Inc. |
6,220,625
|
|
630,315
|
1
|
Emergent
BioSolutions, Inc. |
4,550,874
|
|
346,318
|
1
|
Erasca,
Inc. |
6,285,672
|
|
399,795
|
1
|
EyePoint,
Inc. |
4,897,489
|
|
65,058
|
1
|
Guardant
Health, Inc. |
10,538,745
|
|
33,398
|
1
|
Haemonetics
Corp. |
2,856,865
|
|
48,313
|
1
|
Halozyme
Therapeutics, Inc. |
3,987,755
|
|
105,851
|
1
|
Harmony
Biosciences Holdings, Inc. |
3,730,189
|
|
140,528
|
1
|
Hinge
Health, Inc. |
10,498,847
|
|
565,385
|
1,2
|
ImmunityBio,
Inc. |
4,053,810
|
|
589,089
|
1
|
Indivior
Pharmaceuticals, Inc. |
23,569,451
|
|
900,029
|
1
|
Innovage
Holding Corp. |
10,224,329
|
|
371,379
|
1
|
Inogen,
Inc. |
2,395,395
|
|
820,243
|
1
|
Intellia
Therapeutics, Inc. |
8,760,195
|
|
28,902
|
1
|
IRhythm
Holdings, Inc. |
3,386,447
|
|
1,286,341
|
1
|
Ironwood
Pharmaceuticals, Inc. |
5,441,222
|
|
1,374,115
|
1
|
Janux
Therapeutics, Inc. |
20,845,325
|
|
382,340
|
1
|
Keros
Therapeutics, Inc. |
3,850,164
|
|
144,065
|
1
|
Kodiak
Sciences, Inc. |
5,990,223
|
|
12,146
|
1
|
Krystal
Biotech, Inc. |
4,143,244
|
|
37,192
|
|
LeMaitre
Vascular, Inc. |
3,768,293
|
Annual
Financial Statements and Additional Information
3
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Health
Care—continued |
|
|
1,584,352
|
1,2
|
LifeMD,
Inc. |
$ 5,545,232
|
|
330,783
|
1
|
Liquidia
Corp. |
27,822,158
|
|
3,308
|
1
|
Madrigal
Pharmaceuticals, Inc. |
1,545,895
|
|
478,266
|
1
|
Maravai
LifeSciences Holdings, Inc. |
3,142,208
|
|
42,483
|
1
|
Merit
Medical Systems, Inc. |
3,611,480
|
|
180,415
|
1
|
Mirum
Pharmaceuticals, Inc. |
19,114,969
|
|
1,116,258
|
1
|
Myriad
Genetics, Inc. |
3,192,498
|
|
692,795
|
1,2
|
Novavax,
Inc. |
5,071,259
|
|
1,545,608
|
|
Perrigo
Co. PLC |
15,626,097
|
|
647,169
|
1
|
PROCEPT
BioRobotics Corp. |
12,050,287
|
|
394,352
|
1
|
Prothena
Corp. PLC |
3,202,138
|
|
228,108
|
1
|
PTC
Therapeutics, Inc. |
15,513,625
|
|
45,787
|
1
|
Rhythm
Pharmaceuticals, Inc. |
4,544,360
|
|
1,037,971
|
1
|
Rocket
Pharmaceuticals, Inc. |
3,228,090
|
|
645,556
|
1
|
RxSight,
Inc. |
3,879,792
|
|
55,289
|
1
|
Septerna,
Inc. |
1,904,706
|
|
329,945
|
1
|
Tactile
Systems Technology, Inc. |
9,294,551
|
|
49,696
|
1
|
Tandem
Diabetes Care, Inc. |
969,072
|
|
115,251
|
1
|
Tango
Therapeutics, Inc. |
3,132,522
|
|
606,910
|
1
|
Teladoc
Health, Inc. |
4,072,366
|
|
53,895
|
1
|
Tg
Therapeutics, Inc. |
2,804,157
|
|
59,719
|
1
|
Twist
Bioscience Corp. |
5,467,274
|
|
1,080,147
|
1
|
Vanda
Pharmaceuticals, Inc. |
5,508,750
|
|
180,110
|
1
|
Varex
Imaging Corp. |
2,015,431
|
|
28,503
|
1
|
Vaxcyte,
Inc. |
1,541,442
|
|
65,662
|
1
|
Vor
BioPharma, Inc. |
1,388,751
|
|
639,608
|
1
|
Wave
Life Sciences Ltd. |
3,524,240
|
|
615,752
|
1
|
Xeris
Biopharma Holdings, Inc. |
4,975,276
|
|
156,803
|
1
|
Zymeworks,
Inc. |
3,440,258
|
|
|
|
TOTAL
|
449,072,327
|
|
|
|
Industrials—15.1%
|
|
|
559,554
|
1
|
ACV
Auctions, Inc. |
4,191,059
|
|
177,222
|
1
|
Allegiant
Travel Co. |
17,381,934
|
|
129,761
|
|
Apogee
Enterprises, Inc. |
5,138,536
|
|
88,722
|
|
Atkore,
Inc. |
6,473,157
|
|
77,823
|
|
Atmus
Filtration Technologies, Inc. |
4,018,001
|
|
275,355
|
1
|
Babcock
& Wilcox Enterprises, Inc. |
2,566,309
|
|
12,775
|
1
|
Bloom
Energy Corp. |
2,629,223
|
|
95,146
|
1
|
Blue
Bird Corp. |
7,077,911
|
|
329,259
|
1
|
BrightView
Holdings, Inc. |
4,293,537
|
|
161,576
|
1
|
CoreCivic,
Inc. |
4,831,122
|
|
558,794
|
|
Costamare,
Inc. |
8,706,011
|
|
9,700
|
|
Emcor
Group, Inc. |
7,735,071
|
|
17,451
|
|
EnerSys,
Inc. |
3,246,759
|
|
443,536
|
1
|
Fluence
Energy, Inc. |
6,178,456
|
|
359,850
|
1
|
Fluor
Corp. |
18,053,674
|
|
154,013
|
1
|
Franklin
Covey Co. |
3,303,579
|
|
153,491
|
1
|
Fuelcell
Energy, Inc. |
3,316,941
|
|
90,970
|
|
Granite
Construction, Inc. |
11,004,641
|
|
62,389
|
|
Griffon
Corp. |
5,376,060
|
|
1,845,314
|
1,2
|
Hertz
Global Holdings, Inc. |
2,924,823
|
|
67,890
|
1
|
Hurco
Co., Inc. |
1,414,828
|
Annual
Financial Statements and Additional Information
4
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Industrials—continued
|
|
|
69,088
|
|
Hyster-Yale,
Inc. |
$ 2,309,612
|
|
34,518
|
|
ICF
International, Inc. |
2,793,197
|
|
106,654
|
|
Insperity,
Inc. |
5,397,759
|
|
82,314
|
|
Interface,
Inc. |
2,820,078
|
|
111,170
|
|
Kennametal,
Inc. |
3,776,445
|
|
168,989
|
1
|
Legence
Corp. |
10,803,467
|
|
167,657
|
|
Leonardo
DRS, Inc. |
7,720,605
|
|
99,739
|
1
|
Manitowoc,
Inc. |
1,381,385
|
|
499,192
|
1
|
Mistras
Group, Inc. |
7,592,710
|
|
16,324
|
|
MOOG,
Inc., Class A |
6,363,911
|
|
731,889
|
|
Mueller
Water Products, Inc. |
18,472,878
|
|
56,241
|
1
|
NextPower,
Inc. |
5,054,379
|
|
603,326
|
1,2
|
NuScale
Power Corp. |
5,080,005
|
|
323,059
|
|
Pitney
Bowes, Inc. |
5,663,224
|
|
46,862
|
|
Powell
Industries, Inc. |
9,779,162
|
|
174,961
|
|
Primoris
Services Corp. |
14,768,458
|
|
336,321
|
1
|
RXO,
Inc. |
6,810,500
|
|
80,433
|
1
|
SkyWest,
Inc. |
8,603,918
|
|
122,325
|
|
Tecnoglass
Holdings, Inc. |
5,313,798
|
|
121,322
|
|
TriNet
Group, Inc. |
7,986,627
|
|
1,460,829
|
1,2
|
TTEC
Holdings, Inc. |
3,637,464
|
|
35,324
|
|
Tutor
Perini Corp. |
2,958,385
|
|
180,991
|
1
|
V2X,
Inc. |
16,332,628
|
|
1,369,560
|
1
|
Verra
Mobility Corp. |
7,244,972
|
|
228,100
|
|
Wabash
National Corp. |
2,864,936
|
|
28,142
|
|
Watts
Water Technologies Inc., Class A |
9,731,222
|
|
110,491
|
|
Werner
Enterprises, Inc. |
4,134,573
|
|
463,159
|
|
Zurn
Elkay Water Solutions Corp. |
23,394,161
|
|
|
|
TOTAL
|
338,652,091
|
|
|
|
Information
Technology—13.0% |
|
|
563,202
|
|
Adtran
Holdings, Inc. |
4,792,849
|
|
17,698
|
|
Advanced
Energy Industries, Inc. |
5,123,925
|
|
77,562
|
1
|
Alarm.com
Holdings, Inc. |
4,246,519
|
|
628,226
|
1
|
Arteris,
Inc. |
18,771,393
|
|
343,003
|
1
|
AvePoint,
Inc. |
4,469,329
|
|
31,717
|
1
|
Axcelis
Technologies, Inc. |
4,135,262
|
|
86,182
|
|
Badger
Meter, Inc. |
11,578,552
|
|
200,596
|
1
|
Box,
Inc. |
6,328,804
|
|
1,241,592
|
1,2
|
C3.AI,
Inc. |
11,397,815
|
|
104,664
|
1
|
Calix,
Inc. |
3,757,438
|
|
381,749
|
1
|
Cerence,
Inc. |
3,252,501
|
|
137,894
|
1
|
Ceva,
Inc. |
4,502,239
|
|
271,184
|
1
|
Cipher
Digital, Inc. |
6,052,827
|
|
77,416
|
|
Clear
Secure, Inc. |
4,276,460
|
|
53,550
|
1
|
Digi
International, Inc. |
3,733,506
|
|
156,729
|
1
|
Extreme
Networks, Inc. |
4,723,812
|
|
30,612
|
1
|
FormFactor,
Inc. |
3,250,994
|
|
513,867
|
1
|
Freshworks,
Inc. |
5,834,960
|
|
608,894
|
1
|
Grid
Dynamics Holdings, Inc. |
4,195,280
|
|
210,733
|
|
Hackett
Group, Inc. |
2,259,058
|
|
77,166
|
1
|
Hut
8 Corp. |
8,305,377
|
|
583,350
|
1,2
|
indie
Semiconductor, Inc. |
1,884,220
|
Annual
Financial Statements and Additional Information
5
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Information
Technology—continued |
|
|
17,058
|
1
|
Insight
Enterprises, Inc. |
$ 2,199,288
|
|
47,255
|
1
|
Intapp,
Inc. |
1,544,766
|
|
8,112
|
|
InterDigital,
Inc. |
2,472,740
|
|
37,085
|
1
|
Itron,
Inc. |
3,695,891
|
|
116,089
|
|
Kulicke
& Soffa Industries, Inc. |
10,355,139
|
|
96,549
|
1
|
MaxLinear,
Inc. |
6,451,404
|
|
688,409
|
|
Methode
Electronics, Inc., Class A |
9,630,842
|
|
128,692
|
|
Napco
Security Technologies, Inc. |
4,771,899
|
|
374,867
|
1
|
Navitas
Semiconductor Corp. |
4,071,056
|
|
68,075
|
1
|
NetScout
Systems, Inc. |
2,768,610
|
|
60,284
|
1
|
nLight,
Inc. |
4,147,539
|
|
346,093
|
1
|
Par
Technology Corp. |
5,866,276
|
|
96,672
|
|
Power
Integrations, Inc. |
5,868,957
|
|
203,562
|
1
|
Q2
Holdings, Inc. |
12,390,819
|
|
32,910
|
1
|
Qualys,
Inc. |
4,763,722
|
|
24,167
|
1
|
Semtech
Corp. |
2,847,356
|
|
1,108,117
|
1
|
Sprinklr,
Inc. |
7,047,624
|
|
439,499
|
1
|
SPS
Commerce, Inc. |
32,254,832
|
|
320,523
|
1
|
Tenable
Holdings, Inc. |
10,461,871
|
|
333,971
|
1,2
|
Terawulf,
Inc. |
5,897,928
|
|
89,697
|
1
|
Ultra
Clean Holdings, Inc. |
7,472,657
|
|
698,072
|
1
|
Unisys
Corp. |
2,003,467
|
|
103,283
|
1
|
Viant
Technology, Inc. |
1,215,641
|
|
112,209
|
1
|
ViaSat,
Inc. |
8,632,238
|
|
32,103
|
1
|
Viavi
Solutions, Inc. |
1,186,206
|
|
488,603
|
1
|
Weave
Communications, Inc. |
3,195,464
|
|
53,601
|
1
|
Workiva,
Inc. |
3,205,340
|
|
|
|
TOTAL
|
293,292,692
|
|
|
|
Materials—4.0%
|
|
|
2,154,433
|
|
Ardagh
Metal Packaging |
10,190,468
|
|
682,041
|
1
|
Aspen
Aerogels, Inc. |
3,157,850
|
|
192,370
|
|
Commercial
Metals Corp. |
13,219,666
|
|
179,049
|
1
|
Compass
Minerals International, Inc. |
5,253,298
|
|
322,925
|
1
|
Constellium
SE |
8,970,856
|
|
110,959
|
1,2
|
Flotek
Industries, Inc. |
2,611,975
|
|
979,667
|
|
FMC
Corp. |
10,492,234
|
|
1,750,047
|
|
Hecla
Mining Co. |
24,710,664
|
|
215,812
|
1
|
Perimeter
Solutions, Inc. |
6,606,005
|
|
180,789
|
1
|
SSR
Mining, Inc. |
4,631,814
|
|
|
|
TOTAL
|
89,844,830
|
|
|
|
Real
Estate—6.7% |
|
|
776,749
|
|
American
Healthcare REIT, Inc. |
43,187,244
|
|
27,588
|
|
COPT
Defense Properties |
1,047,241
|
|
609,000
|
1
|
Cushman
& Wakefield Ltd. |
8,172,780
|
|
301,629
|
|
Essential
Properties Realty Trust, Inc. |
9,437,972
|
|
454,616
|
|
Industrial
Logistics Properties Trust |
3,914,244
|
|
565,182
|
2
|
NetSTREIT
Corp. |
12,123,154
|
|
938,600
|
|
Newmark
Group, Inc. |
14,074,307
|
|
734,933
|
1,2
|
Opendoor
Technologies, Inc. |
2,770,697
|
|
355,114
|
|
Outfront
Media, Inc. |
11,317,483
|
|
104,829
|
|
Phillips
Edison & Co., Inc. |
4,454,184
|
|
942,210
|
2
|
Postal
Realty Trust, Inc. |
21,708,518
|
Annual
Financial Statements and Additional Information
6
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Real
Estate—continued |
|
|
521,628
|
|
RLJ
Lodging Trust |
$ 6,389,943
|
|
260,859
|
|
RMR
Group, Inc./The |
4,966,755
|
|
204,001
|
|
Tanger,
Inc. |
8,294,681
|
|
|
|
TOTAL
|
151,859,203
|
|
|
|
Utilities—1.6%
|
|
|
54,072
|
|
Avista
Corp. |
2,187,212
|
|
77,401
|
|
California
Water Service Group |
3,878,564
|
|
150,674
|
|
Hawaiian
Electric Industries, Inc. |
1,946,708
|
|
125,930
|
|
ONE
Gas, Inc. |
9,778,465
|
|
98,912
|
|
Otter
Tail Corp. |
8,745,799
|
|
201,659
|
|
Portland
General Electric Co. |
9,947,838
|
|
|
|
TOTAL
|
36,484,586
|
|
|
|
TOTAL
COMMON STOCKS
(IDENTIFIED
COST $1,728,298,736) |
2,196,172,173
|
|
|
|
INVESTMENT
COMPANY—5.2% |
|
|
115,540,679
|
|
Federated
Hermes Government Obligations Fund, Premier Shares, 3.57%3
(IDENTIFIED
COST $115,540,679) |
115,540,679
|
|
|
|
TOTAL
INVESTMENT IN SECURITIES—102.8%
(IDENTIFIED
COST $1,843,839,415)4
|
2,311,712,852
|
|
|
|
OTHER
ASSETS AND LIABILITIES - NET—(2.8)%5
|
(61,905,600)
|
|
|
|
NET
ASSETS—100% |
$2,249,807,252
|
An affiliated company is a company in which
the Fund, alone or in combination with other Federated Hermes funds, has ownership of at least
5% of the voting shares. Transactions with affiliated companies during the period ended July 31, 2026, were as follows:
|
Affiliated
|
Value
as of
7/31/2025
|
Purchases
at
Cost* |
Proceeds
from
Sales* |
Change
in
Unrealized
Appreciation/
(Depreciation)*
|
Net
Realized
Gain/
(Loss)*
|
Value
as of
7/31/2026
|
Shares
Held
as of
7/31/2026
|
Dividend
Income*
|
|
Consumer
Discretionary: |
|
|
|
|
|
|
|
|
|
Advance
Auto Parts, Inc. |
$6,151,131
|
$2,380,048
|
$(1,204,514)
|
$316,145
|
$(191,008)
|
$7,451,802
|
134,170
|
$140,471
|
|
Consumer
Staples: |
|
|
|
|
|
|
|
|
|
MGP
Ingredients, Inc.** |
$15,060,938
|
$9,531,106
|
$(7,622,210)
|
$(3,338,300)
|
$(3,827,823)
|
$9,803,711
|
553,882
|
$553,882
|
|
Health
Care: |
|
|
|
|
|
|
|
|
|
EyePoint,
Inc. |
$6,096,443
|
$—
|
$(2,703,564)
|
$99,411
|
$1,405,199
|
$4,897,489
|
399,795
|
$—
|
|
LifeMD,
Inc. |
$691,005
|
$6,918,599
|
$—
|
$(2,064,372)
|
$—
|
$5,545,232
|
1,584,352
|
$—
|
|
TOTAL
OF AFFILIATED COMPANIES
TRANSACTIONS
|
$27,999,517
|
$18,829,753
|
$(11,530,288)
|
$(4,987,116)
|
$(2,613,632)
|
$27,698,234
|
2,672,199
|
$694,353
|
|
*
|
A
portion of the amount shown may have been recorded when the Fund no longer had ownership of at least 5% of the voting shares.
|
|
**
|
At
July 31, 2026, the Fund no longer has ownership of at least 5% of the voting shares. |
Annual
Financial Statements and Additional Information
7
Transactions with affiliated
investment companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period
ended July 31, 2026, were as follows:
|
|
Federated
Hermes
Government
Obligations
Fund,
Premier
Shares* |
|
Value
as of 7/31/2025 |
$51,228,116
|
|
Purchases
at Cost |
$1,514,598,572
|
|
Proceeds
from Sales |
$(1,450,286,009)
|
|
Change
in Unrealized Appreciation/Depreciation |
$—
|
|
Net
Realized Gain/(Loss) |
$—
|
|
Value
as of 7/31/2026 |
$115,540,679
|
|
Shares
Held as of 7/31/2026 |
115,540,679
|
|
Dividend
Income |
$3,399,102
|
|
*
|
All
or a portion of the balance/activity for the fund relates to cash collateral received on securities lending transactions.
|
|
1
|
Non-income-producing
security. |
|
2
|
All
or a portion of these securities are temporarily on loan to unaffiliated broker/dealers. |
|
3
|
7-day
net yield. |
|
4
|
The
cost of investments for federal tax purposes amounts to $1,851,576,542. |
|
5
|
Assets,
other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Note: The categories of investments are
shown as a percentage of net assets at July 31, 2026.
Various inputs are used in determining the
value of the Fund’s investments. These inputs are summarized in the three broad levels listed
below:
Level 1—quoted prices in active markets
for identical securities.
Level 2—other significant observable
inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs
(including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing
securities are not an indication of the risk associated with investing in those securities.
As of July 31, 2026, all investments of
the Fund utilized Level 1 inputs in valuing the Fund’s assets carried at fair value.
|
The
following acronym(s) are used throughout this portfolio: |
| |
|
REIT
|
—Real
Estate Investment Trust | |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
8
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$25.64
|
$25.01
|
$21.08
|
$20.57
|
$26.48
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.04)
|
0.01
|
0.04
|
0.05
|
0.04
|
|
Net
realized and unrealized gain (loss) |
8.30
|
0.65
|
3.91
|
1.15
|
(1.95)
|
|
Total
From Investment Operations |
8.26
|
0.66
|
3.95
|
1.20
|
(1.91)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.03)
|
(0.03)
|
(0.02)
|
—
|
(0.04)
|
|
Distributions
from net realized gain |
(2.18)
|
—
|
—
|
(0.69)
|
(3.96)
|
|
Total
Distributions |
(2.21)
|
(0.03)
|
(0.02)
|
(0.69)
|
(4.00)
|
|
Net
Asset Value, End of Period |
$31.69
|
$25.64
|
$25.01
|
$21.08
|
$20.57
|
|
Total
Return2
|
33.38%
|
2.65%
|
18.75%
|
6.23%
|
(9.54)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.14%
|
1.13%
|
1.13%
|
1.13%
|
1.13%
|
|
Net
investment income (loss) |
(0.12)%
|
0.04%
|
0.21%
|
0.26%
|
0.15%
|
|
Expense
waiver/reimbursement4
|
0.15%
|
0.21%
|
0.24%
|
0.25%
|
0.23%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$161,269
|
$126,287
|
$129,184
|
$121,927
|
$131,704
|
|
Portfolio
turnover5
|
76%
|
82%
|
85%
|
128%
|
124%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
9
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$20.96
|
$20.58
|
$17.48
|
$17.32
|
$23.02
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.21)
|
(0.16)
|
(0.11)
|
(0.10)
|
(0.13)
|
|
Net
realized and unrealized gain (loss) |
6.69
|
0.54
|
3.21
|
0.95
|
(1.61)
|
|
Total
From Investment Operations |
6.48
|
0.38
|
3.10
|
0.85
|
(1.74)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(2.18)
|
—
|
—
|
(0.69)
|
(3.96)
|
|
Net
Asset Value, End of Period |
$25.26
|
$20.96
|
$20.58
|
$17.48
|
$17.32
|
|
Total
Return2
|
32.26%
|
1.85%
|
17.73%
|
5.35%
|
(10.30)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.96%
|
1.98%
|
1.98%
|
1.98%
|
1.96%
|
|
Net
investment income (loss) |
(0.92)%
|
(0.79)%
|
(0.63)%
|
(0.59)%
|
(0.65)%
|
|
Expense
waiver/reimbursement4
|
0.00%5
|
0.02%
|
0.06%
|
0.06%
|
0.08%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$22,053
|
$20,500
|
$24,425
|
$24,784
|
$26,809
|
|
Portfolio
turnover6
|
76%
|
82%
|
85%
|
128%
|
124%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Represents
less than 0.01%. |
|
6
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
10
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$26.92
|
$26.25
|
$22.11
|
$21.54
|
$27.53
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
0.03
|
0.08
|
0.10
|
0.10
|
0.10
|
|
Net
realized and unrealized gain (loss) |
8.72
|
0.68
|
4.11
|
1.20
|
(2.04)
|
|
Total
From Investment Operations |
8.75
|
0.76
|
4.21
|
1.30
|
(1.94)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.09)
|
(0.09)
|
(0.07)
|
(0.04)
|
(0.09)
|
|
Distributions
from net realized gain |
(2.18)
|
—
|
—
|
(0.69)
|
(3.96)
|
|
Total
Distributions |
(2.27)
|
(0.09)
|
(0.07)
|
(0.73)
|
(4.05)
|
|
Net
Asset Value, End of Period |
$33.40
|
$26.92
|
$26.25
|
$22.11
|
$21.54
|
|
Total
Return2
|
33.68%
|
2.91%
|
19.09%
|
6.47%
|
(9.31)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.89%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
|
Net
investment income |
0.10%
|
0.29%
|
0.44%
|
0.51%
|
0.40%
|
|
Expense
waiver/reimbursement4
|
0.09%
|
0.10%
|
0.14%
|
0.15%
|
0.15%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$1,740,771
|
$1,102,675
|
$1,026,996
|
$883,270
|
$995,056
|
|
Portfolio
turnover5
|
76%
|
82%
|
85%
|
128%
|
124%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
11
Financial
Highlights–Class
R6 Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$26.93
|
$26.26
|
$22.12
|
$21.55
|
$27.54
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.01)
|
0.08
|
0.10
|
0.11
|
0.11
|
|
Net
realized and unrealized gain (loss) |
8.78
|
0.69
|
4.11
|
1.20
|
(2.05)
|
|
Total
From Investment Operations |
8.77
|
0.77
|
4.21
|
1.31
|
(1.94)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
(0.10)
|
(0.10)
|
(0.07)
|
(0.05)
|
(0.09)
|
|
Distributions
from net realized gain |
(2.18)
|
—
|
—
|
(0.69)
|
(3.96)
|
|
Total
Distributions |
(2.28)
|
(0.10)
|
(0.07)
|
(0.74)
|
(4.05)
|
|
Net
Asset Value, End of Period |
$33.42
|
$26.93
|
$26.26
|
$22.12
|
$21.55
|
|
Total
Return2
|
33.73%
|
2.92%
|
19.09%
|
6.47%
|
(9.30)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
|
Net
investment income (loss) |
(0.04)%
|
0.29%
|
0.43%
|
0.52%
|
0.44%
|
|
Expense
waiver/reimbursement4
|
0.01%
|
0.02%
|
0.06%
|
0.06%
|
0.06%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$325,715
|
$115,099
|
$192,898
|
$133,351
|
$63,242
|
|
Portfolio
turnover5
|
76%
|
82%
|
85%
|
128%
|
124%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income ratios shown above. Amount does not reflect expense
waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
12
Statement
of Assets and Liabilities
July 31, 2026
|
Assets:
|
|
|
Investment
in securities, at value including $66,570,621 of securities loaned and $133,435,202 of investments in affiliated
holdings* (identified
cost $1,843,839,415, including $132,221,337 of identified cost in affiliated holdings) |
$2,311,712,852
|
|
Cash
|
29,296
|
|
Income
receivable |
500,385
|
|
Income
receivable from affiliated holdings |
147,396
|
|
Receivable
for investments sold |
3,022,473
|
|
Receivable
for shares sold |
9,218,884
|
|
Total
Assets |
2,324,631,286
|
|
Liabilities:
|
|
|
Payable
for investments purchased |
4,187,268
|
|
Payable
for shares redeemed |
952,131
|
|
Payable
for collateral due to broker for securities lending (Note 2) |
69,064,455
|
|
Payable
for investment adviser fee (Note 5)
|
45,784
|
|
Payable
for administrative fee (Note 5)
|
4,781
|
|
Payable
for Directors’/Trustees’ fees (Note 5)
|
1,698
|
|
Payable
for distribution services fee (Note 5)
|
14,550
|
|
Payable
for other service fees (Notes 2 and 5)
|
73,324
|
|
Accrued
expenses (Note 5)
|
480,043
|
|
Total
Liabilities |
74,824,034
|
|
Net
assets for 67,832,486 shares outstanding |
$2,249,807,252
|
|
Net Assets
Consist of: |
|
|
Paid-in
capital |
$1,577,467,595
|
|
Total
distributable earnings (loss) |
672,339,657
|
|
Net
Assets |
$2,249,807,252
|
|
Net Asset
Value, Offering Price and Redemption Proceeds Per Share: |
|
|
Class A
Shares: |
|
|
Net
asset value per share ($161,268,862 ÷ 5,089,506 shares outstanding), no par value, unlimited shares authorized |
$31.69
|
|
Offering
price per share (100/94.50 of $31.69) |
$33.53
|
|
Redemption
proceeds per share |
$31.69
|
|
Class C
Shares: |
|
|
Net
asset value per share ($22,052,554 ÷ 873,162 shares outstanding), no par value, unlimited shares authorized |
$25.26
|
|
Offering
price per share |
$25.26
|
|
Redemption
proceeds per share (99.00/100 of $25.26) |
$25.01
|
|
Institutional
Shares: |
|
|
Net
asset value per share ($1,740,771,190 ÷ 52,122,641 shares outstanding), no par value, unlimited shares authorized |
$33.40
|
|
Offering
price per share |
$33.40
|
|
Redemption
proceeds per share |
$33.40
|
|
Class R6
Shares: |
|
|
Net
asset value per share ($325,714,646 ÷ 9,747,177 shares outstanding), no par value, unlimited shares authorized |
$33.42
|
|
Offering
price per share |
$33.42
|
|
Redemption
proceeds per share |
$33.42
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
13
Statement
of Operations
Year Ended July 31,
2026
|
Investment
Income: |
|
|
Dividends
(including $2,084,592 received from affiliated holdings and net of foreign taxes withheld of $79,228) |
$16,150,206
|
|
Net
income on securities loaned (includes $2,008,863 earned from affiliated holdings related to cash collateral balances*) (Note 2)
|
648,569
|
|
TOTAL
INCOME |
16,798,775
|
|
Expenses:
|
|
|
Investment
adviser fee (Note 5)
|
12,844,822
|
|
Administrative
fee (Note 5)
|
1,327,826
|
|
Custodian
fees |
74,005
|
|
Transfer
agent fees (Note 2) |
1,852,096
|
|
Directors’/Trustees’
fees (Note 5)
|
8,969
|
|
Auditing
fees |
35,313
|
|
Legal
fees |
11,287
|
|
Portfolio
accounting fees |
193,570
|
|
Distribution
services fee (Note 5)
|
169,641
|
|
Other
service fees (Notes 2 and 5)
|
418,688
|
|
Share
registration costs |
267,576
|
|
Printing
and postage |
66,686
|
|
Miscellaneous
(Note 5)
|
36,440
|
|
TOTAL
EXPENSES |
17,306,919
|
|
Waiver
and Reimbursements: |
|
|
Waiver/reimbursement
of investment adviser fee (Note 5) |
(77,750)
|
|
Reimbursement
of other operating expenses (Notes 2 and 5) |
(1,391,554)
|
|
TOTAL
WAIVER AND REIMBURSEMENTS |
(1,469,304)
|
|
Net
expenses |
15,837,615
|
|
Net
investment income |
961,160
|
|
Realized
and Unrealized Gain (Loss) on Investments: |
|
|
Net
realized gain on investments (including net realized loss of $(2,613,632) on sales of investments in affiliated holdings)
|
270,565,034
|
|
Net
change in unrealized appreciation of investments (including net change in unrealized appreciation of $(4,987,116) on investments in
affiliated
holdings*) |
217,356,377
|
|
Net
realized and unrealized gain (loss) on investments |
487,921,411
|
|
Change
in net assets resulting from operations |
$488,882,571
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
14
Statement
of Changes in Net Assets
|
Year
Ended July 31 |
2026
|
2025
|
|
Increase
(Decrease) in Net Assets |
|
|
|
Operations:
|
|
|
|
Net
investment income |
$961,160
|
$3,409,944
|
|
Net
realized gain (loss) |
270,565,034
|
97,373,140
|
|
Net
change in unrealized appreciation/depreciation |
217,356,377
|
(63,836,601)
|
|
CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS |
488,882,571
|
36,946,483
|
|
Distributions
to Shareholders: |
|
|
|
Class
A Shares |
(10,648,231)
|
(157,684)
|
|
Class
C Shares |
(2,037,713)
|
—
|
|
Institutional
Shares |
(93,039,083)
|
(3,742,443)
|
|
Class
R6 Shares |
(10,302,733)
|
(702,672)
|
|
CHANGE
IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
(116,027,760)
|
(4,602,799)
|
|
Share Transactions:
|
|
|
|
Proceeds
from sale of shares |
1,040,461,761
|
404,957,231
|
|
Net
asset value of shares issued to shareholders in payment of distributions declared |
104,353,792
|
4,255,657
|
|
Cost
of shares redeemed |
(632,424,328)
|
(450,498,214)
|
|
CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
512,391,225
|
(41,285,326)
|
|
Change
in net assets |
885,246,036
|
(8,941,642)
|
|
Net Assets:
|
|
|
|
Beginning
of period |
1,364,561,216
|
1,373,502,858
|
|
End
of period |
$2,249,807,252
|
$1,364,561,216
|
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
15
Notes to
Financial Statements
July 31, 2026
1. ORGANIZATION
Federated Hermes MDT Series (the “Trust”)
is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end
management investment company. The Trust consists of five portfolios. The financial statements included herein are only those of
Federated Hermes MDT Small Cap Core Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated
and a shareholder’s interest is limited to the portfolio in which shares are
held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares. All shares of the Fund have equal rights
with respect to voting, except on class-specific matters. The investment objective
of the Fund is long-term capital appreciation.
2. SIGNIFICANT
ACCOUNTING POLICIES
The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its financial statements.
These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In
calculating its net asset value (NAV), the Fund generally values investments as follows:
■
Equity
securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official
closing price in their principal exchange or market.
■
Shares
of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share
practical expedient, as applicable.
■
For
securities that are fair valued in accordance with procedures established by and under the general supervision of Federated MDTA LLC
(the “Adviser”) certain factors may be considered, such as: the last traded or purchase price of the security, information
obtained by contacting the issuer or dealers, analysis of the
issuer’s financial statements or other available documents, fundamental analytical data,
the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public
trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors
including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation
or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain
price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth
in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion
of the Adviser’s valuation committee (“Valuation Committee”),
is deemed not representative of the fair value of such security, the Fund uses the
fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund
could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines
its NAV per share, and the actual value obtained could be materially different.
Fair Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Act, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s
valuation designee to perform any fair value determinations for
securities and other assets held by the Fund. The Adviser is subject to the Trustees’
oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the
Adviser’s fair value determinations.
The Adviser, acting through
its Valuation Committee, is responsible for determining the fair value of investments for which market quotations
are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated
companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use
pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The
Valuation Committee employs various methods for reviewing third-party
pricing-service evaluations including periodic reviews of third-party
pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional
back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on
recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee
determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review
the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant
events procedures as part of the Fund’s compliance program
and will review any changes made to the procedures.
Factors considered by
pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon,
maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers
and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an
investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price
between the prices bid and ask for the investment (a “mid”
evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities,
mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income
securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment,
the fair value of the investment is determined in accordance with procedures adopted by the Adviser.
Annual
Financial Statements and Additional Information
16
The
Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines
that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment
would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both
an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying
the resulting change in value. Examples of significant events
that may occur after the close of the principal market on which a security is traded,
or after the time of a price evaluation provided by a pricing service or a dealer, include:
■
With
respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities
index futures contracts;
■
Political
or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are
traded;
■
Announcements
concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s
operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby
the Valuation Committee uses a pricing service to provide factors to update the fair value of
equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the
pricing time of the Fund. For other significant events, the Fund
may seek to obtain more current quotations or price evaluations from alternative
pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the
investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations
made in response to significant events.
Repurchase Agreements
The
Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to
a repurchase agreement to transfer to the Fund’s custodian
or sub-custodian eligible securities or cash with a market value (after transaction
costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred
to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control”
as those terms are defined in the Uniform Commercial Code. Certain
repurchase agreements may be structured as loans secured by a security
interest or lien on the eligible securities. The Fund has established procedures for monitoring the market value of the transferred securities
and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also
allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase
price or in exchange for other eligible securities of equivalent market value.
The insolvency of the
other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause
the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund
in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into
repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the
custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund
will participate on a pro rata basis with the other investment
companies and clients in its share of the securities transferred under such repurchase
agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment
transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an
identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Foreign dividends are recorded on the
ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions
of net investment income and capital gains, if any, are declared and paid at least annually. Non-cash dividends included in dividend
income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment
income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average
daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense
waiver and reimbursements of $1,469,304 is disclosed in this Note 2 and Note 5. Dividends are declared separately for each class.
No class has preferential dividend rights; differences in per share dividend rates are generally due to differences in separate class
expenses.
Transfer Agent Fees
For
the year ended July 31, 2026, transfer agent fees for the Fund were as follows:
|
|
Transfer
Agent
Fees
Incurred |
Transfer
Agent
Fees
Reimbursed |
|
Class
A Shares |
$248,184
|
$(206,305)
|
|
Class
C Shares |
22,223
|
—
|
|
Institutional
Shares |
1,567,617
|
(1,185,249)
|
|
Class
R6 Shares |
14,072
|
—
|
|
TOTAL
|
$1,852,096
|
$(1,391,554)
|
Other Service Fees
The
Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial
intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder
accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service
fees.
Annual
Financial Statements and Additional Information
17
For
the year ended July 31, 2026, other service fees for the Fund were as follows:
|
|
Other
Service
Fees
Incurred |
|
Class
A Shares |
$362,584
|
|
Class
C Shares |
56,104
|
|
TOTAL
|
$418,688
|
Federal Taxes
It
is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 and to distribute to shareholders
each year substantially all of its income. Accordingly, no provision
for federal income tax is necessary. As of and during the year ended July
31, 2026, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related
to tax liabilities as income tax expense in the Statement of Operations.
As of July 31, 2026, tax years 2023 through 2026 remain subject to
examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of
Massachusetts.
The Fund may be subject
to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income
or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized
gains as income and/or gains are earned.
When-Issued and Delayed-Delivery Transactions
The
Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased
on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the
contract.
Securities Lending
The
Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the
loans within the program is one year or less. The Fund receives
cash collateral for securities loaned, which generally is invested in an affiliated
money market fund. Collateral is maintained at a minimum level of 100% of the fair value of investments loaned, plus interest, if applicable.
In accordance with the Fund’s securities lending agreement, the fair value of securities on loan is determined each day at the close
of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business
day. Earnings from collateral invested in affiliated holdings as presented parenthetically on the Statement of Operations do not reflect
fees and rebates and are allocated between the borrower of the security, the securities lending agent, as a fee for its services under
the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on
loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are
deemed to be material by the Adviser. There can be no assurance
that the Fund will have sufficient notice of such matters to be able to terminate
the loan in time to vote thereon.
Securities lending transactions
are subject to Master Netting Agreements which are agreements between the Fund and its counterparties
that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of
default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement
amounts but gross. As indicated below, the cash collateral received by the Fund exceeds the fair value of the securities loaned
reducing the net settlement amount to zero. The chart below identifies the amount of collateral received as well as the fair value of
securities on loan. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause
stipulates that the borrower will reimburse the Fund for any losses
as a result of any failure of the borrower to return equivalent securities to
the Fund.
As of July 31, 2026, securities subject
to this type of arrangement and related collateral were as follows:
|
Fair
Value of
Securities
Loaned |
Collateral
Received
|
|
$66,570,621
|
$69,064,455
|
Other
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from
those estimated. The Fund applies investment company accounting
and reporting guidance.
Annual
Financial Statements and Additional Information
18
3. SHARES
OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
A Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
891,239
|
$25,838,140
|
808,258
|
$20,230,156
|
|
Shares
issued to shareholders in payment of distributions declared |
345,546
|
9,663,903
|
5,613
|
143,416
|
|
Shares
redeemed |
(1,071,906)
|
(30,912,434)
|
(1,054,074)
|
(26,247,570)
|
|
NET
CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
164,879
|
$4,589,609
|
(240,203)
|
$(5,873,998)
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
C Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
122,434
|
$2,807,203
|
98,332
|
$2,033,258
|
|
Shares
issued to shareholders in payment of distributions declared |
88,431
|
1,979,975
|
—
|
—
|
|
Shares
redeemed |
(315,930)
|
(7,516,318)
|
(306,641)
|
(6,231,638)
|
|
NET
CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
(105,065)
|
$(2,729,140)
|
(208,309)
|
$(4,198,380)
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Institutional
Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
24,705,803
|
$743,831,092
|
12,599,186
|
$332,146,298
|
|
Shares
issued to shareholders in payment of distributions declared |
2,857,612
|
84,205,285
|
129,165
|
3,459,049
|
|
Shares
redeemed |
(16,404,007)
|
(500,103,666)
|
(10,894,378)
|
(281,489,641)
|
|
NET
CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
11,159,408
|
$327,932,711
|
1,833,973
|
$54,115,706
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
R6 Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
8,320,256
|
$267,985,326
|
1,948,230
|
$50,547,519
|
|
Shares
issued to shareholders in payment of distributions declared |
288,543
|
8,504,629
|
24,373
|
653,192
|
|
Shares
redeemed |
(3,135,383)
|
(93,891,910)
|
(5,044,962)
|
(136,529,365)
|
|
NET
CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS |
5,473,416
|
$182,598,045
|
(3,072,359)
|
$(85,328,654)
|
|
NET
CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS |
16,692,638
|
$512,391,225
|
(1,686,898)
|
$(41,285,326)
|
4. FEDERAL
TAX INFORMATION
The tax character of distributions as reported
on the Statement of Changes in Net Assets for the years ended July 31, 2026 and 2025,
was as follows:
|
|
2026
|
2025
|
|
Ordinary
income |
$9,075,951
|
$4,602,799
|
|
Long-term
capital gains |
$106,951,809
|
$—
|
|
TOTAL
|
$116,027,760
|
$4,602,799
|
As of July 31, 2026, the components of distributable
earnings on a tax-basis were as follows:
|
Net
unrealized appreciation |
$460,136,310
|
|
Undistributed
long-term capital gains |
$226,020,651
|
|
Capital
loss deferrals |
$(13,817,304)
|
|
TOTAL
|
$672,339,657
|
At July 31, 2026, the cost of investments
for federal tax purposes was $1,851,576,542. The net unrealized appreciation of investments for
federal tax purposes was $460,136,310. This consists of unrealized appreciation from investments for those securities having an excess
of value over cost of $531,764,445 and unrealized depreciation from investments for those securities having an excess of cost over
value of $71,628,135. The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments
for the deferral of losses on wash sales.
Annual
Financial Statements and Additional Information
19
Under
current tax rules, a late-year ordinary loss may be deferred, in whole or in part, and treated as occurring on the first day of the following
fiscal year. As of July 31, 2026, for federal income tax purposes, a late year ordinary loss of $13,817,304 was deferred to August
1, 2026.
5. INVESTMENT
ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The
advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.75% of the Fund’s average daily net assets.
Prior to October 1, 2024, the investment adviser fee was 0.80% of the Fund’s average daily net assets. Subject to the terms described
in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or reimburse certain operating
expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and when appropriate, to maintain
positive or zero net yields. For the year ended July 31, 2026, the Adviser voluntarily waived $8,898 of its fee and voluntarily reimbursed
$1,391,554 of transfer agent fees.
The Adviser has agreed
to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment
companies. For the year ended July 31, 2026, the Adviser reimbursed $68,852.
Administrative Fee
Federated
Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and
services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated
Hermes Funds subject to a fee under the Administrative Services
Agreement. The fee paid to FAS is based on the average daily net assets
of the Investment Complex as specified below:
|
Administrative
Fee |
Average
Daily Net Assets
of
the Investment Complex |
|
0.100%
|
on
assets up to $50 billion |
|
0.075%
|
on
assets over $50 billion |
Subject to the terms described in the Expense
Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket
expenses to the Fund.
Distribution Services Fee
The
Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will compensate Federated Securities Corp. (FSC), the principal
distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares
to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses
at the following percentages of average daily net assets annually,
to compensate FSC:
|
|
Percentage
of Average Daily
Net
Assets of Class |
|
Class
A Shares |
0.05%
|
|
Class
C Shares |
0.75%
|
Subject to the terms described in the Expense
Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, distribution services fees for the Fund were as follows:
|
|
Distribution
Services
Fees
Incurred |
|
Class
C Shares |
$169,641
|
When FSC receives fees, it may pay some
or all of them to financial intermediaries whose customers purchase shares. For the year ended July
31, 2026, FSC retained $16,769 of fees paid by the Fund. For the year ended July 31, 2026, Class A Shares did not incur a distribution
services fee; however, it may begin to incur this fee upon approval of the Trustees.
Sales Charges
Front-end
sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended
July 31, 2026, FSC retained $4,333 in sales charges from the sale of Class A Shares. FSC also retained $810 and $772 of CDSC relating
to redemptions of Class A Shares and Class C Shares, respectively.
Other Service Fees
For
the year ended July 31, 2026, FSSC received $4,184 of the other service fees disclosed in Note 2.
Annual
Financial Statements and Additional Information
20
Expense Limitation
The
Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding
interest expense, extraordinary expenses and proxy-related expenses, if any) paid by the Fund’s Class A Shares, Class C Shares,
Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 1.14%, 2.01%, 0.89% and
0.88% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October
1, 2027; or (b) the date of the Fund’s next effective Prospectus.
Prior to October 1, 2025, the Fee Limit for the Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares was 1.13%, 2.00%, 0.88% and 0.87%, respectively. While the Adviser and its applicable affiliates currently do not
anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or
the Fee Limit increased prior to the Termination Date with the approval of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain
Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate
payment, Independent Directors’/Trustees’ fees and
certain expenses related to conducting meetings of the Directors/Trustees and other
miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related
to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous
Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INVESTMENT
TRANSACTIONS
Purchases and sales of investments, excluding
long-term U.S. government securities and short-term obligations, for the year ended July
31, 2026, were as follows:
|
Purchases
|
$1,658,747,601
|
|
Sales
|
$1,286,100,186
|
7. LINE
OF CREDIT
The Fund participates with certain other
Federated Hermes Funds, on a several basis, in an up to $400,000,000 unsecured, 364-day, committed,
revolving line of credit (LOC) agreement dated June 16, 2026. The LOC was made available to temporarily finance the repurchase
or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary
or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s
ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied
before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on
any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and
(iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under
the LOC pays its pro rata share of a commitment fee based on the amount of
the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2026, the Fund had no outstanding
loans. During the year ended July 31, 2026, the Fund did not utilize the LOC.
8. INTERFUND
LENDING
Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries
of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility
allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2026, there were no outstanding loans. During
the year ended July 31, 2026, the program was not utilized.
9. OPERATING
SEGMENTS
An operating segment is defined as a component
of a public entity that engages in business activities from which it may recognize revenues
and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM)
to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. A management committee of the Adviser acts as the CODM. The Fund represents a single operating segment, as the
CODM monitors the operating results of the Fund as a whole and the strategic asset allocation is determined based on the investment
objective of the Fund and executed by the Fund’s portfolio management team. The financial information in the form of the Fund’s
portfolio composition, total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations,
subscriptions and redemptions) which is reviewed by the CODM to assess the Fund’s performance in comparison to the Fund’s
benchmarks and to make resource allocation decisions for the Fund’s single segment is consistent with the information presented
in these financial statements. Segment assets are reflected on
the accompanying Statement of Assets and Liabilities as “total assets” and significant
segment expenses are listed on the accompanying Statement of Operations.
10. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties to the Fund). In addition,
in the normal course of business, the Fund provides certain indemnifications under
arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into
by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to
Annual
Financial Statements and Additional Information
21
the arrangement, provided
the third party’s actions are not deemed to have breached an agreed-upon standard of care (such as willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund
does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss
to be remote.
11. FEDERAL
TAX INFORMATION (UNAUDITED)
For the year ended July 31, 2026, the amount
of long-term capital gains designated by the Fund was $106,951,809.
For the fiscal year ended
July 31, 2026, 100% of total ordinary income distributions made by the Fund are qualifying dividends which may
be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act of 2003. Complete information is reported
in conjunction with the reporting of your distributions on Form 1099-DIV.
Of the ordinary income
distributions made by the Fund during the year ended July 31, 2026, 100% qualify for the dividend received deduction
available to corporate shareholders.
Annual
Financial Statements and Additional Information
22
Report of
Independent Registered Public Accounting Firm
TO THE SHAREHOLDERS AND THE BOARD OF TRUSTEES OF FEDERATED
HERMES MDT SMALL CAP CORE FUND:
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of Federated Hermes MDT Small Cap Core Fund (the
“Fund”) (one of the portfolios constituting Federated Hermes MDT Series (the “Trust”)), including the portfolio
of investments, as of July 31, 2026, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period
then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated
Hermes MDT Series) at July 31, 2026, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are
the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2026, by correspondence with the custodian, brokers, and others; when replies
were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor
of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2026
September 23, 2026
Annual
Financial Statements and Additional Information
23
Evaluation
and Approval of Advisory Contract–May
2026
Federated Hermes MDT Small
Cap Core Fund (the “Fund”)
At its meetings in May 2026 (the
“May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who
are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the
“Independent Trustees ”), reviewed and unanimously approved the continuation of the investment advisory contract between
the Fund and Federated MDTA LLC (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s
determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering
such information deemed necessary to evaluate the terms of the Contract and to approve the continuation of the
existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized
below.
Information Received
and Review Process
At the request
of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance
of its May Meetings an independent written report regarding data related to the Fund’s management fee (the
“CCO Management Fee Report”). The Board considered the CCO Management Fee Report, along with other information,
in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation
of the Contract.
In addition
to the CCO Management Fee Report, the Board considered information specifically prepared in connection with
the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding
the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the
Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent
legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized
below. The Board also considered such additional matters as the Independent Trustees deemed reasonably necessary
to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the
Board at its meetings throughout the year.
The Board’s
consideration of the Contract included review of materials and information covering the following matters, among
others: (1) a copy of the Contract; (2) the nature, quality and extent of the advisory and other services provided to the
Fund by Federated Hermes; (3) Federated Hermes’ business and operations; (4) the Adviser’s investment philosophy, personnel
and processes; (5) the Fund’s investment objective and strategies; (6) the Fund’s short-term and long-term performance
- in absolute terms (both on a gross basis and net of expenses) and relative to an appropriate group of peer funds
and its benchmark; (7) the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the
Fund - in absolute terms and relative to an appropriate group of peer funds, with due regard for contractual or voluntary
expense limitations (if any); (8) the financial condition of Federated Hermes; (9) the Adviser’s profitability with respect
to managing the Fund; (10) distribution and sales activity for the Fund; and (11) the use and allocation of brokerage
commissions derived from trading the Fund’s portfolio securities (if any).
The Board
also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered
funds in evaluating the Contract. Using these judicial decisions as a guide, the Board considered several factors it
deemed relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund, including: (1) the nature
and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the
fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser
of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the
fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its
shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with
the fund, including research services received from
brokers that execute fund trades and any fees paid to affiliates of the adviser
for services rendered to the fund; (5) comparative fees and expenses, including a comparison of management fees paid
to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees
charged to institutional and other advisory clients of the same adviser for what might be viewed as like services; and (6)
the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their
expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the
adviser’s services and fees. The Board considered that the Securities and Exchange Commission (“SEC”) disclosure requirements
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with
the factors listed above. The Board was guided by these factors in its evaluation of the Contract to the extent it considered
them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors
in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters
relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively,
the “Federated Hermes Funds”).
Annual
Financial Statements and Additional Information
24
In
addition, the Board considered the preferences and expectations of Fund shareholders and the potential disruptions of the
Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate
or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund
based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes
will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there are a range
of investment options available to the Fund’s shareholders in the marketplace, and such shareholders, having had the opportunity
to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the
Fund.
In determining
to approve the continuation of the Contract, the members of the Board reviewed and evaluated information
and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment.
While individual members of the Board may have weighed certain factors differently, the Board’s determination
to approve the continuation of the Contract was based on a comprehensive consideration of all information provided
to the Board throughout the year. The Board recognized that its evaluation process is evolutionary and that the factors
considered and the emphasis placed on relevant factors may change in recognition of changing circumstances in the
registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal
counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive
session with their independent legal counsel and without management present to review the relevant materials and
consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes
also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations
furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as
part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made
on a fund-by-fund basis.
Nature, Extent and
Quality of Services
The Board
considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources
of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the
Contract and the full range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel,
investment philosophy and process, investment research capabilities and resources, trade operations capabilities,
experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities
of the portfolio management team primarily responsible for the day-to-day management of the Fund and evaluated
Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board
considered the trading operations by the Adviser, including the execution of portfolio transactions and the selection of
brokers for those transactions. The Board also considered the Adviser’s ability to deliver competitive investment performance
for the Fund when compared to the Fund’s Performance Peer Group (as defined below).
In addition,
the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to
consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational
enhancements that are designed to benefit the Federated Hermes Funds. The Board considered Federated Hermes’
oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted
the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered
the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests
made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes
is responsible for providing the Federated Hermes Funds’ officers.
The Board
received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The
Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated
Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any
compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated
Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes
in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended,
including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The
Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes
Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and
policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led,
and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard. In addition, the Board noted
Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for
and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service
providers operate.
Annual
Financial Statements and Additional Information
25
The
Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive
array of funds with different investment objectives, policies and strategies. The Board considered the expenses
that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in
sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted
the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to
exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on
these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services
provided by the Adviser to the Fund.
Fund Investment Performance
The Board
considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board
considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered
detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods
that were provided to the Board throughout the year and in connection with the May Meetings. These reports included,
among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared
to one or more relevant categories or groups of peer funds and the Fund’s benchmark, performance attribution information
and commentary on the effect of market conditions. The Board noted that it evaluated investment performance at
meetings throughout the year and received reports from Federated Hermes regarding the performance of certain Federated
Hermes Funds as well as Federated Hermes’ explanations for less favorable performance and any specific actions
Federated Hermes had taken, or had determined to take, to seek to enhance Fund investment performance and the results
of those actions.
The Board
also reviewed comparative information regarding the performance of other registered funds in the category of
peer funds selected by Morningstar, Inc. (“Morningstar”), an independent fund ranking organization (the “Performance
Peer Group”). The Board noted the CCO’s
statement that comparisons to fund peer groups may be helpful, though not conclusive,
in evaluating the performance of the Adviser in managing the Fund. The Board also considered a report comparing
the performance of the Fund solely to other funds with a quantitative focus in the Performance Peer Group.
The Board
also considered comparative performance data from Lipper, Inc. that was included in reports provided to the Board
throughout the year.
The Board
considered that for the one-year, three-year and five-year periods ended December 31, 2025, the Fund’s performance
was above the median of the Performance Peer Group. In addition, the Board was informed by the Adviser that,
for the same periods, the Fund outperformed its benchmark for the one-year, three-year and five-year periods.
Based on
these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities
to manage the Fund.
Fund Expenses
The Board
considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information
that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and
considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each
element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting
fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from
the overall category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board received a description
of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also
reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar
category.
While mindful
that courts have cautioned against giving too much weight to comparative information concerning fees charged
to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board
in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds more
heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The
Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained
by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore,
appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund
competes.
The Board
reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position
of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory
fee rate was above the median of the Expense Peer Group, but the Board noted the applicable waivers and reimbursements,
and that the overall expense structure of the Fund remained competitive in the context of other factors
Annual
Financial Statements and Additional Information
26
considered
by the Board. In this regard, the Board considered that, while comparisons to the Fund’s Expense Peer Group are
relevant in judging the reasonableness of advisory fees, the quantitative focus of the management of the Fund makes fee
and expense comparisons to the Expense Peer Group particularly difficult. The Board further considered that, although the
Fund’s advisory fee was above the median of the Expense Peer Group, the funds in the Expense Peer Group varied widely
in terms of the complexity of their management, and the management of the Fund is among the more complex funds
relative to the Expense Peer Group. In considering the Fund’s expenses, the Board noted that the Adviser recommended,
and the Board approved, a contractual advisory fee reduction for the Fund by 5 basis points, effective October
1, 2024.
The Board
also received and considered information about the nature and extent of services offered and fees charged by Federated
Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including
non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for
which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s statement that non-registered fund clients
are inherently different products due to the following differences, among others: (i) types of targeted investors; (ii)
applicable laws and regulations; (iii) legal structures; (iv) average account sizes; (v) portfolio management techniques made
necessary by different cash flows and different associated costs; (vi) the time spent by portfolio managers and their teams
(among other personnel across various departments, including legal, compliance and risk management) in reviewing securities
pricing; (vii) SEC mandated risk management programs with respect to fund liquidity and use of derivatives; (viii)
questions on regulatory reporting; (ix) a variety of different administrative responsibilities; and (x) degrees of risk associated
with management. The Board also considered information regarding the differences in the nature of the services required
for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as
a sub-adviser to another institution’s registered fund, noting the CCO’s statement that Federated Hermes generally performs
significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes
Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO emphasized
that differences in fees for providing advisory services to other types of clients may not be appropriate when judging
the appropriateness of the Federated Hermes Funds’ advisory fees because of the different services provided.
Based on
these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction
with other matters considered, are reasonable in light of the services provided.
Profitability
The Board
received and considered profitability information furnished by Federated Hermes. Such profitability information
included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund
basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered
the CCO’s statement that, while the cost allocation report applies consistent allocation processes for purposes of
general comparison of funds, the inherent difficulties in arbitrarily allocating costs lack precision and may cause the report
to be unreliable because a single change in an allocation estimate can dramatically alter the resulting estimate of cost
and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered
the CCO’s statement that the allocation methodologies used by Federated Hermes in estimating profitability for purposes
of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies
previously reviewed by an independent consultant. The Board noted that the independent consultant had previously
conducted a review of the allocation methodologies and reported to the Board that, although there is no single best
method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s
statement that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation
to the services provided.
The Board
also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly-held
fund management companies, including information regarding profitability trends over time. The Board recognized
that profitability comparisons among fund management companies are difficult because of the variation in the type
of comparative information that is publicly available, and the profitability of any fund management company is affected
by numerous factors. The Board considered the CCO’s statement that, based on such profitability information, Federated
Hermes’ profit margins did not appear to be excessive and that Federated Hermes appeared financially sound, with
the resources available to fulfill its contractual obligations.
Economies of Scale
The Board
received and considered information about the notion of possible realization of “economies of scale” as a fund
grows larger, the difficulties of isolating and quantifying economies of scale at an individual fund level, and the extent
to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes
has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio
management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity
and information security programs; internal audit and risk management functions; and technology, systems
Annual
Financial Statements and Additional Information
27
capabilities
and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed
to provide enhanced or expanded services to the Federated Hermes Funds and their shareholders. The Board considered
that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole.
In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies
of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes
Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive in
the marketplace, Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds
and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future.
The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds
in recent years, which has resulted in benefits being realized by shareholders.
The Board
also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments)
that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered
that Federated Hermes believes that this information is relevant to consider whether Federated Hermes had an incentive
to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating
the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines
on economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring
fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board
considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes
derived from its relationships with the Federated Hermes Funds. The Board considered that Federated Hermes may
derive a benefit to its reputation as an adviser to the Fund, which may help in attracting other clients and investment personnel.
The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory
contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds
under separate service contracts, including for serving as the Federated Hermes Funds’ administrator and distributor.
In this regard, the Board considered that Federated Hermes’ affiliates provide distribution and shareholder services
to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant
to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any,
that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the
Federated Hermes Funds.
Conclusions
The Board
considered the CCO’s presentation and statements and the information accompanying the CCO Management Fee
Report. The Board recognized that its evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements
is a continuing and ongoing process that is informed by the information that the Board requests and receives from
management throughout the course of the year.
On the basis
of the information and factors summarized above, among other information and factors deemed relevant by the
Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation
of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances
and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations
identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them
to be determinative.
Annual
Financial Statements and Additional Information
28
Mutual funds are not
bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Investment in mutual funds involves investment risk, including the possible loss of principal.
This information is authorized
for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus,
which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes MDT Small Cap Core Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31421R817
CUSIP 31421R791
CUSIP 31421R783
CUSIP 31421R627
CUSIP 31421R791
CUSIP 31421R783
CUSIP 31421R627
37328 (9/26)
©
2026 Federated Hermes, Inc.
Annual Financial Statements
and Additional Information
and Additional Information
July 31, 2026
|
Share
Class | Ticker
|
A | QASGX
|
C | QCSGX
|
Institutional | QISGX
|
R6 | QLSGX
|
Federated Hermes MDT Small Cap Growth Fund
A Portfolio of Federated Hermes MDT Series
Not FDIC Insured ▪ May
Lose Value ▪ No Bank Guarantee
CONTENTS
Portfolio
of Investments
July 31, 2026
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—98.0% |
|
|
|
|
Communication
Services—1.0% |
|
|
257,063
|
1
|
Bumble,
Inc. |
$ 732,630
|
|
267,418
|
1,2
|
Grindr,
Inc. |
4,637,028
|
|
524,184
|
1
|
Lumen
Technologies, Inc. |
3,344,294
|
|
|
|
TOTAL
|
8,713,952
|
|
|
|
Consumer
Discretionary—9.1% |
|
|
44,959
|
1
|
Abercrombie
& Fitch Co., Class A |
4,475,219
|
|
31,586
|
1
|
American
Public Education, Inc. |
1,532,237
|
|
318,871
|
|
Arko
Corp. |
2,547,779
|
|
297,344
|
|
Bloomin
Brands, Inc. |
2,574,999
|
|
11,733
|
1
|
Brinker
International, Inc. |
2,507,342
|
|
111,057
|
|
Camping
World Holdings, Inc. |
687,443
|
|
461,643
|
1
|
Coursera,
Inc. |
2,451,324
|
|
5,073
|
1
|
Covista,
Inc. |
633,364
|
|
130,496
|
2
|
Cracker
Barrel Old Country Store, Inc. |
7,358,669
|
|
379,287
|
|
Ermenegildo
Zegna Holditalia SpA |
5,579,312
|
|
339,230
|
1
|
Krispy
Kreme, Inc. |
1,078,751
|
|
212,927
|
1
|
Lindblad
Expeditions Holdings, Inc. |
6,298,381
|
|
205,824
|
1
|
Navan,
Inc. |
5,479,035
|
|
236,316
|
1
|
Pattern
Group, Inc. |
5,439,994
|
|
280,108
|
1
|
Peloton
Interactive, Inc. |
1,789,890
|
|
25,641
|
|
Red
Rock Resorts, Inc. |
1,652,306
|
|
44,478
|
1
|
Revolve
Group, Inc. |
1,116,843
|
|
96,713
|
1
|
Rush
Street Interactive, Inc. |
2,602,547
|
|
324,676
|
|
Super
Group SGHC Ltd. |
4,545,464
|
|
567,890
|
1
|
Sweetgreen,
Inc. |
3,662,891
|
|
246,409
|
1
|
The
RealReal, Inc. |
2,979,085
|
|
176,590
|
1
|
ThredUp,
Inc. |
1,020,690
|
|
41,211
|
1
|
Victoria’s
Secret & Co. |
3,654,592
|
|
207,512
|
|
Wolverine
World Wide, Inc. |
4,083,836
|
|
|
|
TOTAL
|
75,751,993
|
|
|
|
Consumer
Staples—0.6% |
|
|
43,684
|
|
MGP
Ingredients, Inc. |
773,207
|
|
171,004
|
1
|
The
Simply Good Foods Co. |
1,740,821
|
|
22,627
|
1
|
Vita
Coco Co., Inc./The |
1,492,024
|
|
87,894
|
1,2
|
Vital
Farms, Inc. |
1,118,890
|
|
|
|
TOTAL
|
5,124,942
|
|
|
|
Energy—4.8%
|
|
|
72,450
|
|
Archrock,
Inc. |
2,590,812
|
|
55,657
|
|
CVR
Energy, Inc. |
1,982,502
|
|
67,620
|
|
Delek
US Holdings, Inc. |
4,589,369
|
|
195,771
|
|
DHT
Holdings, Inc. |
3,635,467
|
|
82,146
|
2
|
FLEX
LNG Ltd. |
2,563,777
|
|
106,151
|
|
Kodiak
Gas Services, Inc. |
6,232,125
|
|
176,654
|
|
Liberty
Energy, Inc. |
3,305,196
|
|
106,032
|
|
Magnolia
Oil & Gas Corp. |
2,726,083
|
|
105,815
|
1
|
Noble
Corp. PLC |
4,486,556
|
|
296,217
|
|
SFL
Corp. Ltd. |
3,655,318
|
|
52,759
|
1
|
Tidewater,
Inc. |
3,960,091
|
|
|
|
TOTAL
|
39,727,296
|
Annual
Financial Statements and Additional Information
1
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Financials—10.9%
|
|
|
133,887
|
|
Acadian
Asset Management, Inc. |
$ 11,579,887
|
|
154,370
|
|
Artisan
Partners Asset Management, Inc. |
6,057,479
|
|
10,219
|
1
|
Axos
Financial, Inc. |
1,036,309
|
|
36,063
|
|
Bank
of Hawaii Corp. |
2,881,434
|
|
9,537
|
1
|
Coastal
Financial Corp. |
390,922
|
|
8,503
|
1
|
Dave,
Inc. |
3,168,983
|
|
36,524
|
1
|
Flywire
Corp. |
584,749
|
|
121,323
|
1
|
Hamilton
Insurance Group Ltd. |
4,362,775
|
|
9,447
|
|
HCI
Group, Inc. |
1,653,319
|
|
58,865
|
1
|
Lemonade,
Inc. |
2,843,768
|
|
19,687
|
1
|
LendingTree,
Inc. |
627,228
|
|
42,032
|
|
Marex
Group Ltd. |
2,728,717
|
|
44,294
|
|
Mercury
General Corp. |
4,744,773
|
|
38,796
|
|
Moelis
& Co. |
2,602,436
|
|
117,170
|
1
|
Oscar
Health, Inc. |
3,658,047
|
|
35,840
|
1
|
Palomar
Holdings, Inc. |
4,795,034
|
|
25,214
|
|
Pathward
Financial, Inc. |
2,224,883
|
|
117,835
|
1
|
Remitly
Global, Inc. |
2,683,103
|
|
211,241
|
1
|
Siriuspoint
Ltd. |
4,995,850
|
|
85,025
|
1
|
Skyward
Specialty Insurance Group, Inc. |
5,097,249
|
|
328,192
|
1
|
Slide
Insurance Holdings, Inc. |
6,553,994
|
|
40,063
|
|
Texas
Capital Bancshares, Inc. |
3,960,228
|
|
35,884
|
|
UMB
Financial Corp. |
5,229,375
|
|
64,109
|
|
Victory
Capital Holdings, Inc. |
6,348,714
|
|
|
|
TOTAL
|
90,809,256
|
|
|
|
Health
Care—28.9% |
|
|
26,674
|
1
|
10X
Genomics, Inc. |
1,260,880
|
|
275,407
|
1
|
AbSci
Corp. |
2,142,666
|
|
193,237
|
1
|
ADMA
Biologics, Inc. |
1,634,785
|
|
80,017
|
1
|
Alignment
Healthcare, Inc. |
1,188,252
|
|
85,334
|
1
|
Alkermes
PLC |
4,180,513
|
|
177,344
|
1
|
Amylyx
Pharmaceuticals, Inc. |
3,601,857
|
|
44,928
|
1
|
AnaptysBio,
Inc. |
2,397,358
|
|
98,607
|
1
|
Anteris
Technologies Global Corp. |
773,079
|
|
530,118
|
1,2
|
Aquestive
Therapeutics, Inc. |
1,958,786
|
|
238,703
|
1
|
Arcutis
Biotherapeutics, Inc. |
6,411,563
|
|
22,104
|
1
|
Arrowhead
Pharmaceuticals, Inc. |
1,871,104
|
|
256,435
|
1
|
Arvinas,
Inc. |
2,059,173
|
|
237,798
|
1
|
Aurinia
Pharmaceuticals, Inc. |
3,538,434
|
|
306,150
|
1
|
Aveanna
Healthcare Holdings, Inc. |
2,874,748
|
|
39,823
|
1
|
Axsome
Therapeutics, Inc. |
8,681,016
|
|
87,292
|
1
|
Beam
Therapeutics, Inc. |
2,227,692
|
|
228,696
|
1
|
Biohaven
Ltd. |
3,087,396
|
|
226,290
|
1
|
BrightSpring
Health Services, Inc. |
13,511,776
|
|
18,400
|
1
|
Celcuity,
Inc. |
1,589,392
|
|
81,181
|
1
|
CG
Oncology, Inc. |
5,779,275
|
|
104,674
|
1
|
Cogent
Biosciences, Inc. |
4,074,959
|
|
68,629
|
1
|
Definium
Therapeutics, Inc. |
2,986,734
|
|
2,896
|
|
Ensign
Group, Inc. |
515,951
|
|
130,552
|
1
|
Erasca,
Inc. |
2,369,519
|
|
221,743
|
1
|
EyePoint,
Inc. |
2,716,352
|
|
19,230
|
1
|
Glaukos
Corp. |
3,206,026
|
Annual
Financial Statements and Additional Information
2
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Health
Care—continued |
|
|
20,045
|
1
|
Guardant
Health, Inc. |
$ 3,247,090
|
|
22,577
|
1
|
Halozyme
Therapeutics, Inc. |
1,863,506
|
|
55,395
|
1
|
Harmony
Biosciences Holdings, Inc. |
1,952,120
|
|
97,496
|
1
|
Hinge
Health, Inc. |
7,283,926
|
|
515,840
|
1,2
|
ImmunityBio,
Inc. |
3,698,573
|
|
99,392
|
1
|
Immunome,
Inc. |
2,262,162
|
|
319,822
|
1
|
Indivior
Pharmaceuticals, Inc. |
12,796,078
|
|
342,790
|
1
|
Innovage
Holding Corp. |
3,894,094
|
|
30,629
|
1
|
Inspire
Medical Systems, Inc. |
1,537,882
|
|
15,076
|
1
|
IRhythm
Holdings, Inc. |
1,766,455
|
|
732,361
|
1
|
Ironwood
Pharmaceuticals, Inc. |
3,097,887
|
|
376,425
|
1
|
Janux
Therapeutics, Inc. |
5,710,367
|
|
116,178
|
1
|
Keros
Therapeutics, Inc. |
1,169,912
|
|
12,323
|
1
|
Krystal
Biotech, Inc. |
4,203,622
|
|
10,774
|
1
|
Lantheus
Holdings, Inc. |
1,073,521
|
|
15,009
|
|
LeMaitre
Vascular, Inc. |
1,520,712
|
|
796,877
|
1,2
|
LifeMD,
Inc. |
2,789,069
|
|
166,824
|
1
|
Liquidia
Corp. |
14,031,567
|
|
1,775
|
1
|
Madrigal
Pharmaceuticals, Inc. |
829,493
|
|
79,608
|
1
|
Mirum
Pharmaceuticals, Inc. |
8,434,468
|
|
219,522
|
1,2
|
Omeros
Corp. |
2,599,140
|
|
33,226
|
1
|
Oruka
Therapeutics, Inc. |
3,206,641
|
|
188,576
|
1
|
Perspective
Therapeutics, Inc. |
548,756
|
|
22,250
|
|
Phibro
Animal Health Corp. |
808,343
|
|
280,319
|
1
|
PROCEPT
BioRobotics Corp. |
5,219,540
|
|
172,890
|
1
|
Prothena
Corp. PLC |
1,403,867
|
|
123,049
|
1
|
PTC
Therapeutics, Inc. |
8,368,562
|
|
128,646
|
1
|
Puma
Biotechnology, Inc. |
1,020,163
|
|
45,358
|
1
|
Rhythm
Pharmaceuticals, Inc. |
4,501,781
|
|
432,567
|
1
|
Rocket
Pharmaceuticals, Inc. |
1,345,283
|
|
215,750
|
1
|
RxSight,
Inc. |
1,296,658
|
|
50,112
|
1
|
Spyre
Therapeutics, Inc. |
4,927,513
|
|
109,270
|
1
|
Tactile
Systems Technology, Inc. |
3,078,136
|
|
50,056
|
1
|
Tandem
Diabetes Care, Inc. |
976,092
|
|
106,669
|
1
|
Tango
Therapeutics, Inc. |
2,899,263
|
|
28,082
|
1
|
Tarsus
Pharmaceuticals, Inc. |
1,657,961
|
|
485,280
|
1
|
Teladoc
Health, Inc. |
3,256,229
|
|
77,224
|
1
|
Tg
Therapeutics, Inc. |
4,017,965
|
|
46,855
|
1
|
Travere
Therapeutics, Inc. |
2,618,726
|
|
62,771
|
1
|
Twist
Bioscience Corp. |
5,746,685
|
|
66,662
|
1
|
UroGen
Pharma Ltd. |
2,549,155
|
|
43,416
|
1
|
Vaxcyte,
Inc. |
2,347,937
|
|
28,865
|
1
|
Veracyte,
Inc. |
1,337,027
|
|
323,090
|
1
|
Wave
Life Sciences Ltd. |
1,780,226
|
|
451,553
|
1
|
Xeris
Biopharma Holdings, Inc. |
3,648,548
|
|
|
|
TOTAL
|
240,961,987
|
|
|
|
Industrials—17.2%
|
|
|
340,466
|
1
|
ACV
Auctions, Inc. |
2,550,090
|
|
191,810
|
1
|
Amprius
Technologies, Inc. |
1,841,376
|
|
14,065
|
|
Apogee
Enterprises, Inc. |
556,974
|
|
4,522
|
1
|
ATI,
Inc. |
847,604
|
|
19,644
|
|
Atkore,
Inc. |
1,433,226
|
Annual
Financial Statements and Additional Information
3
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Industrials—continued
|
|
|
47,625
|
|
Atmus
Filtration Technologies, Inc. |
$ 2,458,879
|
|
51,649
|
1
|
Blue
Bird Corp. |
3,842,169
|
|
31,506
|
1
|
Bowman
Consulting Group Ltd. |
845,936
|
|
1,250
|
|
Comfort
Systems USA, Inc. |
2,162,112
|
|
468,940
|
1
|
Custom
Truck One Source, Inc. |
4,759,741
|
|
6,617
|
|
Emcor
Group, Inc. |
5,276,594
|
|
12,270
|
|
EnerSys,
Inc. |
2,282,833
|
|
20,408
|
|
Federal
Signal Corp. |
2,549,980
|
|
252,139
|
1
|
Fluence
Energy, Inc. |
3,512,296
|
|
41,916
|
1
|
Fluor
Corp. |
2,102,926
|
|
149,637
|
1
|
Franklin
Covey Co. |
3,209,714
|
|
41,997
|
|
Global
Industrial Co. |
1,500,973
|
|
44,730
|
|
Granite
Construction, Inc. |
5,410,988
|
|
7,273
|
|
Griffon
Corp. |
626,714
|
|
511,687
|
1,2
|
Hertz
Global Holdings, Inc. |
811,024
|
|
58,147
|
|
Insperity,
Inc. |
2,942,820
|
|
26,281
|
|
Interface,
Inc. |
900,387
|
|
52,558
|
1
|
Intuitive
Machines, Inc. |
648,566
|
|
32,760
|
|
KForce
Com, Inc. |
1,859,785
|
|
84,178
|
1
|
Legence
Corp. |
5,381,500
|
|
43,702
|
|
Leonardo
DRS, Inc. |
2,012,477
|
|
156,840
|
1
|
Mistras
Group, Inc. |
2,385,536
|
|
19,621
|
|
MOOG,
Inc., Class A |
7,649,247
|
|
306,606
|
|
Mueller
Water Products, Inc. |
7,738,735
|
|
4,848
|
1
|
MYR
Group, Inc. |
1,615,451
|
|
22,436
|
1
|
NextPower,
Inc. |
2,016,323
|
|
610,565
|
1,2
|
NuScale
Power Corp. |
5,140,957
|
|
168,235
|
|
Pitney
Bowes, Inc. |
2,949,160
|
|
75,260
|
1
|
Planet
Labs PBC |
1,541,325
|
|
6,283
|
|
Powell
Industries, Inc. |
1,311,136
|
|
52,026
|
|
Primoris
Services Corp. |
4,391,515
|
|
119,427
|
1
|
RXO,
Inc. |
2,418,397
|
|
15,609
|
1
|
SPX
Technologies, Inc. |
3,428,049
|
|
44,175
|
|
Tecnoglass
Holdings, Inc. |
1,918,962
|
|
62,038
|
|
TriNet
Group, Inc. |
4,083,962
|
|
48,457
|
|
Tutor
Perini Corp. |
4,058,274
|
|
77,363
|
1
|
V2X,
Inc. |
6,981,237
|
|
652,237
|
1
|
Verra
Mobility Corp. |
3,450,334
|
|
8,740
|
|
Watts
Water Technologies Inc., Class A |
3,022,205
|
|
25,022
|
|
Werner
Enterprises, Inc. |
936,323
|
|
19,659
|
|
Worthington
Industries, Inc. |
1,105,032
|
|
253,591
|
|
Zurn
Elkay Water Solutions Corp. |
12,808,881
|
|
|
|
TOTAL
|
143,278,725
|
|
|
|
Information
Technology—19.4% |
|
|
52,725
|
|
A10
Networks, Inc. |
1,559,078
|
|
15,504
|
|
Advanced
Energy Industries, Inc. |
4,488,718
|
|
68,866
|
1
|
Alarm.com
Holdings, Inc. |
3,770,413
|
|
289,958
|
1
|
Arteris,
Inc. |
8,663,945
|
|
263,755
|
1
|
AvePoint,
Inc. |
3,436,728
|
|
11,683
|
1
|
Axcelis
Technologies, Inc. |
1,523,230
|
|
58,338
|
1
|
AXT,
Inc. |
3,525,365
|
|
46,985
|
|
Badger
Meter, Inc. |
6,312,435
|
Annual
Financial Statements and Additional Information
4
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Information
Technology—continued |
|
|
32,558
|
|
Belden,
Inc. |
$ 4,038,820
|
|
78,910
|
1
|
Box,
Inc. |
2,489,610
|
|
382,602
|
1,2
|
C3.AI,
Inc. |
3,512,286
|
|
94,883
|
1
|
Calix,
Inc. |
3,406,300
|
|
347,608
|
1
|
Cerence,
Inc. |
2,961,620
|
|
209,929
|
1
|
Cipher
Digital, Inc. |
4,685,615
|
|
58,611
|
|
Clear
Secure, Inc. |
3,237,672
|
|
95,751
|
1
|
Core
Scientific, Inc. |
1,983,961
|
|
49,951
|
1
|
Digi
International, Inc. |
3,482,584
|
|
42,968
|
1,2
|
D-Wave
Quantum, Inc. |
776,861
|
|
134,132
|
1
|
Extreme
Networks, Inc. |
4,042,738
|
|
28,204
|
1
|
FormFactor,
Inc. |
2,995,265
|
|
185,682
|
1
|
Freshworks,
Inc. |
2,108,419
|
|
209,007
|
1
|
Grid
Dynamics Holdings, Inc. |
1,440,058
|
|
39,989
|
1
|
Hut
8 Corp. |
4,304,016
|
|
40,928
|
1
|
Ichor
Holdings Ltd. |
3,080,651
|
|
515,494
|
1,2
|
indie
Semiconductor, Inc. |
1,665,046
|
|
12,426
|
1
|
Insight
Enterprises, Inc. |
1,602,084
|
|
100,666
|
1
|
Intapp,
Inc. |
3,290,772
|
|
6,366
|
|
InterDigital,
Inc. |
1,940,516
|
|
15,387
|
1
|
Itron,
Inc. |
1,533,468
|
|
13,059
|
1
|
JFrog
Ltd. |
1,041,978
|
|
59,203
|
|
Kulicke
& Soffa Industries, Inc. |
5,280,908
|
|
32,876
|
1
|
MaxLinear,
Inc. |
2,196,774
|
|
37,913
|
|
Napco
Security Technologies, Inc. |
1,405,814
|
|
331,718
|
1
|
Navitas
Semiconductor Corp. |
3,602,457
|
|
33,301
|
1
|
nLight,
Inc. |
2,291,109
|
|
226,307
|
1,2
|
Ondas
Holdings, Inc. |
1,695,039
|
|
182,840
|
1
|
Par
Technology Corp. |
3,099,138
|
|
36,654
|
|
Power
Integrations, Inc. |
2,225,264
|
|
70,082
|
1
|
Q2
Holdings, Inc. |
4,265,891
|
|
10,641
|
1
|
Qualys,
Inc. |
1,540,285
|
|
10,361
|
1
|
Rambus,
Inc. |
943,162
|
|
107,590
|
1,2
|
Rigetti
Computing, Inc. |
1,608,470
|
|
28,788
|
1
|
Semtech
Corp. |
3,391,802
|
|
1,824
|
1
|
SiTime
Corp. |
976,205
|
|
577,555
|
1
|
Sprinklr,
Inc. |
3,673,250
|
|
167,118
|
1
|
SPS
Commerce, Inc. |
12,264,790
|
|
175,527
|
1
|
T1
Energy, Inc. |
731,948
|
|
186,650
|
1
|
Tenable
Holdings, Inc. |
6,092,256
|
|
104,687
|
1,2
|
Terawulf,
Inc. |
1,848,772
|
|
321,754
|
1
|
Thryv
Holdings, Inc. |
1,303,104
|
|
48,886
|
1
|
Ultra
Clean Holdings, Inc. |
4,072,693
|
|
400,495
|
1
|
Unisys
Corp. |
1,149,421
|
|
47,963
|
1
|
Viavi
Solutions, Inc. |
1,772,233
|
|
35,201
|
1
|
Workiva,
Inc. |
2,105,020
|
|
|
|
TOTAL
|
162,436,057
|
|
|
|
Materials—3.9%
|
|
|
1,031,479
|
|
Ardagh
Metal Packaging |
4,878,896
|
|
98,880
|
|
Coeur
Mining, Inc. |
1,474,301
|
|
40,021
|
|
Commercial
Metals Corp. |
2,750,243
|
|
138,341
|
1
|
Compass
Minerals International, Inc. |
4,058,925
|
Annual
Financial Statements and Additional Information
5
|
Shares
|
|
|
Value
|
|
|
|
COMMON
STOCKS—continued |
|
|
|
|
Materials—continued
|
|
|
350,636
|
1
|
Constellium
SE |
$ 9,740,668
|
|
568,927
|
|
Hecla
Mining Co. |
8,033,249
|
|
9,527
|
1
|
Ingevity
Corp. |
696,519
|
|
19,874
|
|
Koppers
Holdings, Inc. |
974,223
|
|
|
|
TOTAL
|
32,607,024
|
|
|
|
Real
Estate—2.2% |
|
|
125,905
|
|
American
Healthcare REIT, Inc. |
7,000,318
|
|
244,184
|
|
Outfront
Media, Inc. |
7,782,144
|
|
89,968
|
|
RMR
Group, Inc./The |
1,712,991
|
|
84,060
|
|
Xenia
Hotels & Resorts, Inc. |
1,729,955
|
|
|
|
TOTAL
|
18,225,408
|
|
|
|
TOTAL
COMMON STOCKS
(IDENTIFIED
COST $667,925,253) |
817,636,640
|
|
|
|
INVESTMENT
COMPANY—6.2% |
|
|
51,968,227
|
|
Federated
Hermes Government Obligations Fund, Premier Shares, 3.57%3
(IDENTIFIED
COST $51,968,227) |
51,968,227
|
|
|
|
TOTAL
INVESTMENT IN SECURITIES—104.2%
(IDENTIFIED
COST $719,893,480)4
|
869,604,867
|
|
|
|
OTHER
ASSETS AND LIABILITIES - NET—(4.2)%5
|
(34,709,548)
|
|
|
|
NET
ASSETS—100% |
$834,895,319
|
An affiliated company is a company in which
the Fund, alone or in combination with other Federated Hermes funds, has ownership of at least
5% of the voting shares. Transactions with affiliated companies during the period ended July 31, 2026, were as follows:
|
Affiliated
|
Value
as of
7/31/2025
|
Purchases
at
Cost* |
Proceeds
from
Sales* |
Change
in
Unrealized
Appreciation/
(Depreciation)*
|
Net
Realized
Gain/
(Loss)*
|
Value
as of
7/31/2026
|
Shares
Held
as of
7/31/2026
|
Dividend
Income*
|
|
Consumer
Staples: |
|
|
|
|
|
|
|
|
|
MGP
Ingredients, Inc.** |
$4,939,668
|
$—
|
$(2,420,825)
|
$(193,195)
|
$(1,552,441)
|
$773,207
|
43,684
|
$69,265
|
|
Health
Care: |
|
|
|
|
|
|
|
|
|
EyePoint,
Inc. |
$2,833,345
|
$—
|
$(1,004,128)
|
$272,390
|
$614,745
|
$2,716,352
|
221,743
|
$—
|
|
LifeMD,
Inc. |
$931,299
|
$3,249,128
|
$—
|
$(1,391,358)
|
$—
|
$2,789,069
|
796,877
|
$—
|
|
Affiliated
Issuers no longer in the portfolio at
period
end |
$951,100
|
$—
|
$(387,864)
|
$332,811
|
$(896,047)
|
$—
|
$—
|
$—
|
|
TOTAL
OF AFFILIATED COMPANIES
TRANSACTIONS
|
$9,655,412
|
$3,249,128
|
$(3,812,817)
|
$(979,352)
|
$(1,833,743)
|
$6,278,628
|
1,062,304
|
$69,265
|
|
*
|
A
portion of the amount shown may have been recorded when the Fund no longer had ownership of at least 5% of the voting shares.
|
|
**
|
At
July 31, 2026, the Fund no longer has ownership of at least 5% of the voting shares. |
Annual
Financial Statements and Additional Information
6
Transactions with affiliated
investment companies, which are funds managed by the Adviser or an affiliate of the Adviser, during the period
ended July 31, 2026, were as follows:
|
|
Federated
Hermes
Government
Obligations
Fund,
Premier
Shares* |
|
Value
as of 7/31/2025 |
$25,166,383
|
|
Purchases
at Cost |
$598,350,676
|
|
Proceeds
from Sales |
$(571,548,832)
|
|
Change
in Unrealized Appreciation/Depreciation |
$—
|
|
Net
Realized Gain/(Loss) |
$—
|
|
Value
as of 7/31/2026 |
$51,968,227
|
|
Shares
Held as of 7/31/2026 |
51,968,227
|
|
Dividend
Income |
$1,573,258
|
|
*
|
All
or a portion of the balance/activity for the fund relates to cash collateral received on securities lending transactions.
|
|
1
|
Non-income-producing
security. |
|
2
|
All
or a portion of these securities are temporarily on loan to unaffiliated broker/dealers. |
|
3
|
7-day
net yield. |
|
4
|
The
cost of investments for federal tax purposes amounts to $722,610,114. |
|
5
|
Assets,
other than investments in securities, less liabilities. See Statement of Assets and Liabilities. |
Note: The categories of investments are
shown as a percentage of net assets at July 31, 2026.
Various inputs are used in determining the
value of the Fund’s investments. These inputs are summarized in the three broad levels listed
below:
Level 1—quoted prices in active markets
for identical securities.
Level 2—other significant observable
inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk,
etc.). Also includes securities valued at amortized cost.
Level 3—significant unobservable inputs
(including the Fund’s own assumptions in determining the fair value of investments).
The inputs or methodology used for valuing
securities are not an indication of the risk associated with investing in those securities.
As of July 31, 2026, all investments of
the Fund utilized Level 1 inputs in valuing the Fund’s assets carried at fair value.
|
The
following acronym(s) are used throughout this portfolio: |
| |
|
REIT
|
—Real
Estate Investment Trust | |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
7
Financial
Highlights–Class
A Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$26.94
|
$25.19
|
$22.38
|
$20.80
|
$33.76
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.10)
|
(0.12)
|
(0.11)
|
(0.03)
|
(0.04)
|
|
Net
realized and unrealized gain (loss) |
9.00
|
1.87
|
2.92
|
2.24
|
(4.34)
|
|
Total
From Investment Operations |
8.90
|
1.75
|
2.81
|
2.21
|
(4.38)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(1.25)
|
—
|
—
|
(0.63)
|
(8.58)
|
|
Net
Asset Value, End of Period |
$34.59
|
$26.94
|
$25.19
|
$22.38
|
$20.80
|
|
Total
Return2
|
33.68%
|
6.95%
|
12.56%
|
11.18%
|
(18.45)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.14%
|
1.13%
|
1.13%
|
1.13%
|
1.13%
|
|
Net
investment income (loss) |
(0.33)%
|
(0.47)%
|
(0.51)%
|
(0.16)%
|
(0.16)%
|
|
Expense
waiver/reimbursement4
|
0.21%
|
0.27%
|
0.26%
|
0.24%
|
0.21%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$104,012
|
$74,959
|
$80,198
|
$80,993
|
$88,900
|
|
Portfolio
turnover5
|
92%
|
91%
|
90%
|
138%
|
140%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
8
Financial
Highlights–Class
C Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$20.98
|
$19.79
|
$17.73
|
$16.75
|
$28.99
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.27)
|
(0.26)
|
(0.23)
|
(0.16)
|
(0.21)
|
|
Net
realized and unrealized gain (loss) |
6.95
|
1.45
|
2.29
|
1.77
|
(3.45)
|
|
Total
From Investment Operations |
6.68
|
1.19
|
2.06
|
1.61
|
(3.66)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net realized gain |
(1.25)
|
—
|
—
|
(0.63)
|
(8.58)
|
|
Net
Asset Value, End of Period |
$26.41
|
$20.98
|
$19.79
|
$17.73
|
$16.75
|
|
Total
Return2
|
32.64%
|
6.01%
|
11.62%
|
10.27%
|
(19.14)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
1.96%
|
1.99%
|
1.98%
|
1.96%
|
1.96%
|
|
Net
investment income (loss) |
(1.15)%
|
(1.32)%
|
(1.35)%
|
(0.99)%
|
(0.99)%
|
|
Expense
waiver/reimbursement4
|
0.11%
|
0.14%
|
0.14%
|
0.12%
|
0.12%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$11,501
|
$9,787
|
$15,530
|
$18,262
|
$19,373
|
|
Portfolio
turnover5
|
92%
|
91%
|
90%
|
138%
|
140%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value, which does not reflect the sales charge, redemption fee or contingent deferred sales charge, if applicable.
|
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
9
Financial
Highlights–Institutional
Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$29.11
|
$27.15
|
$24.07
|
$22.27
|
$35.50
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.02)
|
(0.06)
|
(0.06)
|
0.02
|
0.02
|
|
Net
realized and unrealized gain (loss) |
9.75
|
2.02
|
3.15
|
2.42
|
(4.67)
|
|
Total
From Investment Operations |
9.73
|
1.96
|
3.09
|
2.44
|
(4.65)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
—
|
—
|
(0.01)
|
(0.01)
|
—
|
|
Distributions
from net realized gain |
(1.25)
|
—
|
—
|
(0.63)
|
(8.58)
|
|
Total
Distributions |
(1.25)
|
—
|
(0.01)
|
(0.64)
|
(8.58)
|
|
Net
Asset Value, End of Period |
$37.59
|
$29.11
|
$27.15
|
$24.07
|
$22.27
|
|
Total
Return2
|
34.03%
|
7.22%
|
12.85%
|
11.49%
|
(18.29)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.89%
|
0.88%
|
0.88%
|
0.88%
|
0.88%
|
|
Net
investment income (loss) |
(0.07)%
|
(0.22)%
|
(0.27)%
|
0.09%
|
0.08%
|
|
Expense
waiver/reimbursement4
|
0.20%
|
0.24%
|
0.23%
|
0.20%
|
0.18%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$397,297
|
$220,731
|
$218,620
|
$258,459
|
$304,721
|
|
Portfolio
turnover5
|
92%
|
91%
|
90%
|
138%
|
140%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
10
Financial
Highlights–Class
R6 Shares
(For a Share Outstanding Throughout Each
Period)
|
|
Year Ended July 31,
| ||||
|
|
2026
|
2025
|
2024
|
2023
|
2022
|
|
Net Asset
Value, Beginning of Period |
$29.13
|
$27.17
|
$24.09
|
$22.29
|
$35.51
|
|
Income
From Investment Operations: |
|
|
|
|
|
|
Net
investment income (loss)1
|
(0.02)
|
(0.06)
|
(0.06)
|
0.02
|
0.02
|
|
Net
realized and unrealized gain (loss) |
9.77
|
2.02
|
3.15
|
2.42
|
(4.66)
|
|
Total
From Investment Operations |
9.75
|
1.96
|
3.09
|
2.44
|
(4.64)
|
|
Less Distributions:
|
|
|
|
|
|
|
Distributions
from net investment income |
—
|
—
|
(0.01)
|
(0.01)
|
—
|
|
Distributions
from net realized gain |
(1.25)
|
—
|
—
|
(0.63)
|
(8.58)
|
|
Total
Distributions |
(1.25)
|
—
|
(0.01)
|
(0.64)
|
(8.58)
|
|
Net
Asset Value, End of Period |
$37.63
|
$29.13
|
$27.17
|
$24.09
|
$22.29
|
|
Total
Return2
|
34.08%
|
7.21%
|
12.85%
|
11.49%
|
(18.24)%
|
|
Ratios
to Average Net Assets: |
|
|
|
|
|
|
Net
expenses3
|
0.88%
|
0.87%
|
0.87%
|
0.87%
|
0.87%
|
|
Net
investment income (loss) |
(0.06)%
|
(0.21)%
|
(0.26)%
|
0.11%
|
0.10%
|
|
Expense
waiver/reimbursement4
|
0.11%
|
0.14%
|
0.14%
|
0.12%
|
0.09%
|
|
Supplemental
Data: |
|
|
|
|
|
|
Net
assets, end of period (000 omitted) |
$322,086
|
$185,904
|
$184,233
|
$182,071
|
$256,060
|
|
Portfolio
turnover5
|
92%
|
91%
|
90%
|
138%
|
140%
|
|
1
|
Per
share numbers have been calculated using the average shares method. |
|
2
|
Based
on net asset value. |
|
3
|
Amount
does not reflect net expenses incurred by investment companies in which the Fund may invest. |
|
4
|
This
expense decrease is reflected in both the net expense and the net investment income (loss) ratios shown above. Amount does not reflect
expense waiver/
reimbursement
recorded by investment companies in which the Fund may invest. |
|
5
|
Securities
that mature are considered sales for purposes of this calculation. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
11
Statement
of Assets and Liabilities
July 31, 2026
|
Assets:
|
|
|
Investment
in securities, at value including $33,992,016 of securities loaned and $57,473,648 of investments in affiliated holdings* (identified
cost
$719,893,480, including $57,438,968 of identified cost in affiliated holdings) |
$869,604,867
|
|
Income
receivable |
106,973
|
|
Income
receivable from affiliated holdings |
58,635
|
|
Receivable
for investments sold |
1,237,054
|
|
Receivable
for shares sold |
1,025,982
|
|
Total
Assets |
872,033,511
|
|
Liabilities:
|
|
|
Payable
for investments purchased |
996,312
|
|
Payable
for shares redeemed |
393,119
|
|
Payable
to bank |
242,999
|
|
Payable
for collateral due to broker for securities lending (Note 2) |
35,163,177
|
|
Payable
for investment adviser fee (Note 5)
|
15,940
|
|
Payable
for administrative fee (Note 5)
|
1,779
|
|
Payable
for Directors’/Trustees’ fees (Note 5)
|
796
|
|
Payable
for distribution services fee (Note 5)
|
7,627
|
|
Payable
for other service fees (Notes 2 and 5)
|
50,155
|
|
Accrued
expenses (Note 5)
|
266,288
|
|
Total
Liabilities |
37,138,192
|
|
Net
assets for 22,571,904 shares outstanding |
$834,895,319
|
|
Net Assets
Consist of: |
|
|
Paid-in
capital |
$571,851,981
|
|
Total
distributable earnings (loss) |
263,043,338
|
|
Net
Assets |
$834,895,319
|
|
Net Asset
Value, Offering Price and Redemption Proceeds Per Share: |
|
|
Class A
Shares: |
|
|
Net
asset value per share ($104,012,194 ÷ 3,006,704 shares outstanding), no par value, unlimited shares authorized |
$34.59
|
|
Offering
price per share (100/94.50 of $34.59) |
$36.60
|
|
Redemption
proceeds per share |
$34.59
|
|
Class C
Shares: |
|
|
Net
asset value per share ($11,500,621 ÷ 435,488 shares outstanding), no par value, unlimited shares authorized |
$26.41
|
|
Offering
price per share |
$26.41
|
|
Redemption
proceeds per share (99.00/100 of $26.41) |
$26.15
|
|
Institutional
Shares: |
|
|
Net
asset value per share ($397,296,727 ÷ 10,569,790 shares outstanding), no par value, unlimited shares authorized |
$37.59
|
|
Offering
price per share |
$37.59
|
|
Redemption
proceeds per share |
$37.59
|
|
Class R6
Shares: |
|
|
Net
asset value per share ($322,085,777 ÷ 8,559,922 shares outstanding), no par value, unlimited shares authorized |
$37.63
|
|
Offering
price per share |
$37.63
|
|
Redemption
proceeds per share |
$37.63
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
12
Statement
of Operations
Year Ended July 31,
2026
|
Investment
Income: |
|
|
Dividends
(including $586,918 received from affiliated holdings* and net of foreign taxes withheld of $9,772) |
$4,938,772
|
|
Net
income on securities loaned (includes $1,055,605 earned from affiliated holdings related to cash collateral balances*) (Note 2)
|
342,032
|
|
TOTAL
INCOME |
5,280,804
|
|
Expenses:
|
|
|
Investment
adviser fee (Note 5)
|
5,158,643
|
|
Administrative
fee (Note 5)
|
502,382
|
|
Custodian
fees |
46,894
|
|
Transfer
agent fees (Note 2) |
635,080
|
|
Directors’/Trustees’
fees (Note 5)
|
4,251
|
|
Auditing
fees |
33,996
|
|
Legal
fees |
11,287
|
|
Portfolio
accounting fees |
143,805
|
|
Distribution
services fee (Note 5)
|
81,828
|
|
Other
service fees (Notes 2 and 5)
|
246,282
|
|
Share
registration costs |
142,961
|
|
Printing
and postage |
72,349
|
|
Miscellaneous
(Note 5)
|
31,523
|
|
TOTAL
EXPENSES |
7,111,281
|
|
Waiver
and Reimbursements: |
|
|
Waiver/reimbursement
of investment adviser fee (Note 5) |
(685,644)
|
|
Reimbursement
of other operating expenses (Notes 2 and 5) |
(364,177)
|
|
TOTAL
WAIVER AND REIMBURSEMENTS |
(1,049,821)
|
|
Net
expenses |
6,061,460
|
|
Net
investment income (loss) |
(780,656)
|
|
Realized
and Unrealized Gain (Loss) on Investments and Foreign Currency Transactions: |
|
|
Net
realized gain on investments (including net realized loss of $(1,833,743) on sales of investments in affiliated holdings*)
|
133,896,996
|
|
Net
realized gain on foreign currency transactions |
75,103
|
|
Net
change in unrealized appreciation of investments (including net change in unrealized appreciation of $(979,352) on investments in
affiliated
holdings*) |
47,675,076
|
|
Net
realized and unrealized gain (loss) on investments and foreign currency transactions |
181,647,175
|
|
Change
in net assets resulting from operations |
$180,866,519
|
|
*
|
See
information listed after the Fund’s Portfolio of Investments. |
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
13
Statement
of Changes in Net Assets
|
Year
Ended July 31 |
2026
|
2025
|
|
Increase
(Decrease) in Net Assets |
|
|
|
Operations:
|
|
|
|
Net
investment loss |
$(780,656)
|
$(1,364,762)
|
|
Net
realized gain (loss) |
133,972,099
|
37,668,862
|
|
Net
change in unrealized appreciation/depreciation |
47,675,076
|
(4,454,389)
|
|
CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS |
180,866,519
|
31,849,711
|
|
Distributions
to Shareholders: |
|
|
|
Class
A Shares |
(3,414,521)
|
—
|
|
Class
C Shares |
(563,523)
|
—
|
|
Institutional
Shares |
(10,431,456)
|
—
|
|
Class
R6 Shares |
(8,267,689)
|
—
|
|
CHANGE
IN NET ASSETS RESULTING FROM DISTRIBUTIONS TO SHAREHOLDERS |
(22,677,189)
|
—
|
|
Share Transactions:
|
|
|
|
Proceeds
from sale of shares |
360,345,371
|
114,343,453
|
|
Net
asset value of shares issued to shareholders in payment of distributions declared |
19,959,594
|
—
|
|
Cost
of shares redeemed |
(194,979,324)
|
(153,394,741)
|
|
CHANGE
IN NET ASSETS RESULTING FROM SHARE TRANSACTIONS |
185,325,641
|
(39,051,288)
|
|
Change
in net assets |
343,514,971
|
(7,201,577)
|
|
Net Assets:
|
|
|
|
Beginning
of period |
491,380,348
|
498,581,925
|
|
End
of period |
$834,895,319
|
$491,380,348
|
See Notes which are an integral part of
the Financial Statements
Annual
Financial Statements and Additional Information
14
Notes to
Financial Statements
July 31, 2026
1. ORGANIZATION
Federated Hermes MDT Series (the “Trust”)
is registered under the Investment Company Act of 1940, as amended (the “Act”), as an open-end
management investment company. The Trust consists of five portfolios. The financial statements included herein are only those of
Federated Hermes MDT Small Cap Growth Fund (the “Fund”), a diversified portfolio. The financial statements of the other portfolios
are presented separately. The assets of each portfolio are segregated
and a shareholder’s interest is limited to the portfolio in which shares
are held. Each portfolio pays its own expenses. The Fund offers four classes of shares: Class A Shares, Class C Shares, Institutional
Shares and Class R6 Shares. All shares of the Fund have equal
rights with respect to voting, except on class-specific matters. The investment
objective of the Fund is to provide long-term capital appreciation.
2. SIGNIFICANT
ACCOUNTING POLICIES
The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its financial statements.
These policies are in conformity with U.S. generally accepted accounting principles (GAAP).
Investment Valuation
In
calculating its net asset value (NAV), the Fund generally values investments as follows:
■
Equity
securities listed on an exchange or traded through a regulated market system are valued at their last reported sale price or official
closing price in their principal exchange or market.
■
Shares
of other mutual funds or non-exchange-traded investment companies are valued based upon their reported NAVs, or NAV per share
practical expedient, as applicable.
■
For
securities that are fair valued in accordance with procedures established by and under the general supervision of Federated MDTA LLC
(the “Adviser”), certain factors may be considered, such as: the last traded or purchase price of the security, information
obtained by contacting the issuer or dealers, analysis of the
issuer’s financial statements or other available documents, fundamental analytical data,
the nature and duration of restrictions on disposition, the movement of the market in which the security is normally traded, public
trading in similar securities or derivative contracts of the issuer or comparable issuers, movement of a relevant index, or other factors
including but not limited to industry changes and relevant government actions.
If any price, quotation, price evaluation
or other pricing source is not readily available when the NAV is calculated, if the Fund cannot obtain
price evaluations from a pricing service or from more than one dealer for an investment within a reasonable period of time as set forth
in the Adviser’s valuation policies and procedures for the Fund, or if information furnished by a pricing service, in the opinion
of the Adviser’s valuation committee (“Valuation Committee”),
is deemed not representative of the fair value of such security, the Fund uses the
fair value of the investment determined in accordance with the procedures described below. There can be no assurance that the Fund
could obtain the fair value assigned to an investment if it sold the investment at approximately the time at which the Fund determines
its NAV per share, and the actual value obtained could be materially different.
Fair Valuation and Significant Events Procedures
Pursuant
to Rule 2a-5 under the Act, the Fund’s Board of Trustees (the “Trustees”) has designated the Adviser as the Fund’s
valuation designee to perform any fair value determinations for
securities and other assets held by the Fund. The Adviser is subject to the Trustees’
oversight and certain reporting and other requirements intended to provide the Trustees the information needed to oversee the
Adviser’s fair value determinations.
The Adviser, acting through
its Valuation Committee, is responsible for determining the fair value of investments for which market quotations
are not readily available. The Valuation Committee is comprised of officers of the Adviser and certain of the Adviser’s affiliated
companies and determines fair value and oversees the calculation of the NAV. The Valuation Committee is also authorized to use
pricing services to provide fair value evaluations of the current value of certain investments for purposes of calculating the NAV. The
Valuation Committee employs various methods for reviewing third-party
pricing-service evaluations including periodic reviews of third-party
pricing services’ policies, procedures and valuation methods (including key inputs, methods, models and assumptions), transactional
back-testing, comparisons of evaluations of different pricing services, and review of price challenges by the Adviser based on
recent market activity. In the event that market quotations and price evaluations are not available for an investment, the Valuation Committee
determines the fair value of the investment in accordance with procedures adopted by the Adviser. The Trustees periodically review
the fair valuations made by the Valuation Committee. The Trustees have also approved the Adviser’s fair valuation and significant
events procedures as part of the Fund’s compliance program
and will review any changes made to the procedures.
Factors considered by
pricing services in evaluating an investment include the yields or prices of investments of comparable quality, coupon,
maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers
and general market conditions. Some pricing services provide a single price evaluation reflecting the bid-side of the market for an
investment (a “bid” evaluation). Other pricing services offer both bid evaluations and price evaluations indicative of a price
between the prices bid and ask for the investment (a “mid”
evaluation). The Fund normally uses bid evaluations for any U.S. Treasury and Agency securities,
mortgage-backed securities and municipal securities. The Fund normally uses mid evaluations for any other types of fixed-income
securities and any OTC derivative contracts. In the event that market quotations and price evaluations are not available for an investment,
the fair value of the investment is determined in accordance with procedures adopted by the Adviser.
Annual
Financial Statements and Additional Information
15
The
Adviser has also adopted procedures requiring an investment to be priced at its fair value whenever the Valuation Committee determines
that a significant event affecting the value of the investment has occurred between the time as of which the price of the investment
would otherwise be determined and the time as of which the NAV is computed. An event is considered significant if there is both
an affirmative expectation that the investment’s value will change in response to the event and a reasonable basis for quantifying
the resulting change in value. Examples of significant events
that may occur after the close of the principal market on which a security is traded,
or after the time of a price evaluation provided by a pricing service or a dealer, include:
■
With
respect to securities traded principally in foreign markets, significant trends in U.S. equity markets or in the trading of foreign securities
index futures contracts;
■
Political
or other developments affecting the economy or markets in which an issuer conducts its operations or its securities are
traded;
■
Announcements
concerning matters such as acquisitions, recapitalizations, litigation developments, or a natural disaster affecting the issuer’s
operations or regulatory changes or market developments affecting the issuer’s industry.
The Adviser has adopted procedures whereby
the Valuation Committee uses a pricing service to provide factors to update the fair value of
equity securities traded principally in foreign markets from the time of the close of their respective foreign stock exchanges to the
pricing time of the Fund. For other significant events, the Fund
may seek to obtain more current quotations or price evaluations from alternative
pricing sources. If a reliable alternative pricing source is not available, the Valuation Committee will determine the fair value of the
investment in accordance with the fair valuation procedures approved by the Adviser. The Trustees periodically review fair valuations
made in response to significant events.
Repurchase Agreements
The
Fund may invest in repurchase agreements for short-term liquidity purposes. It is the policy of the Fund to require the other party to
a repurchase agreement to transfer to the Fund’s custodian
or sub-custodian eligible securities or cash with a market value (after transaction
costs) at least equal to the repurchase price to be paid under the repurchase agreement. The eligible securities are transferred
to accounts with the custodian or sub-custodian in which the Fund holds a “securities entitlement” and exercises “control”
as those terms are defined in the Uniform Commercial Code. Certain
repurchase agreements may be structured as loans secured by a security
interest or lien on the eligible securities. The Fund has established procedures for monitoring the market value of the transferred securities
and requiring the transfer of additional eligible securities if necessary to equal at least the repurchase price. These procedures also
allow the other party to require securities to be transferred from the account to the extent that their market value exceeds the repurchase
price or in exchange for other eligible securities of equivalent market value.
The insolvency of the
other party or other failure to repurchase the securities may delay the disposition of the underlying securities or cause
the Fund to receive less than the full repurchase price. Under the terms of the repurchase agreement, any amounts received by the Fund
in excess of the repurchase price and related transaction costs must be remitted to the other party.
The Fund may enter into
repurchase agreements in which eligible securities are transferred into joint trading accounts maintained by the
custodian or sub-custodian for investment companies and other clients advised by the Fund’s Adviser and its affiliates. The Fund
will participate on a pro rata basis with the other investment
companies and clients in its share of the securities transferred under such repurchase
agreements and in its share of proceeds from any repurchase or other disposition of such securities.
Investment Income, Gains and Losses, Expenses and Distributions
Investment
transactions are accounted for on a trade-date basis. Realized gains and losses from investment transactions are recorded on an
identified-cost basis. Interest income and expenses are accrued daily. Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Foreign dividends are recorded on the
ex-dividend date or when the Fund is informed of the ex-dividend date. Distributions
of net investment income and capital gains, if any, are declared and paid at least annually. Non-cash dividends included in dividend
income, if any, are recorded at fair value. Amortization/accretion of premium and discount is included in investment income. Investment
income, realized and unrealized gains and losses and certain fund-level expenses are allocated to each class based on relative average
daily net assets, except that select classes will bear certain expenses unique to those classes. The detail of the total fund expense
waiver and reimbursements of $1,049,821 is disclosed in various locations in this Note 2 and Note 5. Dividends are declared separately
for each class. No class has preferential dividend rights; differences in per share dividend rates are generally due to differences
in separate class expenses.
Transfer Agent Fees
For
the year ended July 31, 2026, transfer agent fees for the Fund were as follows:
|
|
Transfer
Agent
Fees
Incurred |
Transfer
Agent
Fees
Reimbursed |
|
Class
A Shares |
$141,037
|
$(96,657)
|
|
Class
C Shares |
12,256
|
—
|
|
Institutional
Shares |
398,283
|
(267,520)
|
|
Class
R6 Shares |
83,504
|
—
|
|
TOTAL
|
$635,080
|
$(364,177)
|
Other Service Fees
The
Fund may pay other service fees up to 0.25% of the average daily net assets of the Fund’s Class A Shares and Class C Shares to financial
intermediaries or to Federated Shareholder Services Company (FSSC) for providing services to shareholders and maintaining shareholder
accounts. Subject to the terms described in the Expense Limitation note, FSSC may voluntarily reimburse the Fund for other service
fees.
Annual
Financial Statements and Additional Information
16
For
the year ended July 31, 2026, other service fees for the Fund were as follows:
|
|
Other
Service
Fees
Incurred |
|
Class
A Shares |
$219,104
|
|
Class
C Shares |
27,178
|
|
TOTAL
|
$246,282
|
Federal Taxes
It
is the Fund’s policy to comply with the Subchapter M provision of the Internal Revenue Code of 1986 and to distribute to shareholders
each year substantially all of its income. Accordingly, no provision
for federal income tax is necessary. As of and during the year ended July
31, 2026, the Fund did not have a liability for any uncertain tax positions. The Fund recognizes interest and penalties, if any, related
to tax liabilities as income tax expense in the Statement of Operations.
As of July 31, 2026, tax years 2023 through 2026 remain subject to
examination by the Fund’s major tax jurisdictions, which include the United States of America and the Commonwealth of
Massachusetts.
The Fund may be subject
to taxes imposed by governments of countries in which it invests. Such taxes are generally based on either income
or gains earned or repatriated. The Fund accrues and applies such taxes to net investment income, net realized gains and net unrealized
gains as income and/or gains are earned.
Foreign Currency Translation
The
accounting records of the Fund are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated
into U.S. dollars based on the rates of exchange of such currencies against U.S. dollars on the date of valuation. Purchases and sales
of securities, income and expenses are translated at the rate of exchange quoted on the respective date that such transactions are recorded.
The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized
and unrealized gain or loss from investments.
Reported net realized
foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between
the trade and settlement dates on securities transactions, the difference between the amounts of dividends, interest and foreign
withholding taxes recorded on the Fund’s books, and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized
foreign exchange gains and losses arise from changes in the value of assets and liabilities other than investments in securities at
fiscal year end, resulting from changes in the exchange rate.
When-Issued and Delayed-Delivery Transactions
The
Fund may engage in when-issued or delayed-delivery transactions. The Fund records when-issued securities on the trade date and maintains
security positions such that sufficient liquid assets will be available to make payment for the securities purchased. Securities purchased
on a when-issued or delayed-delivery basis are marked to market daily and begin earning interest on the settlement date. Losses
may occur on these transactions due to changes in market conditions or the failure of counterparties to perform under the
contract.
Securities Lending
The
Fund participates in a securities lending program providing for the lending of equity securities to qualified brokers. The term of the
loans within the program is one year or less. The Fund receives
cash collateral for securities loaned, which generally is invested in an affiliated
money market fund. Collateral is maintained at a minimum level of 100% of the fair value of investments loaned, plus interest, if applicable.
In accordance with the Fund’s securities lending agreement, the fair value of securities on loan is determined each day at the close
of business and any additional collateral required to cover the value of securities on loan is delivered to the Fund on the next business
day. Earnings from collateral invested in affiliated holdings as presented parenthetically on the Statement of Operations do not reflect
fees and rebates and are allocated between the borrower of the security, the securities lending agent, as a fee for its services under
the program and the Fund, according to agreed-upon rates. The Fund will not have the right to vote on securities while they are on
loan. However, the Fund will attempt to terminate a loan in an effort to reacquire the securities in time to vote on matters that are
deemed to be material by the Adviser. There can be no assurance
that the Fund will have sufficient notice of such matters to be able to terminate
the loan in time to vote thereon.
Securities lending transactions
are subject to Master Netting Agreements which are agreements between the Fund and its counterparties
that provide for the net settlement of all transactions and collateral with the Fund, through a single payment, in the event of
default or termination. Amounts presented on the Portfolio of Investments and Statement of Assets and Liabilities are not net settlement
amounts but gross. As indicated below, the cash collateral received by the Fund exceeds the fair value of the securities loaned
reducing the net settlement amount to zero. The chart below identifies the amount of collateral received as well as the fair value of
securities on loan. Additionally, the securities lending agreement executed by the Fund includes an indemnification clause. This clause
stipulates that the borrower will reimburse the Fund for any losses
as a result of any failure of the borrower to return equivalent securities to
the Fund.
As of July 31, 2026, securities subject
to this type of arrangement and related collateral were as follows:
|
Fair
Value of
Securities
Loaned |
Collateral
Received
|
|
$33,992,016
|
$35,163,177
|
Annual
Financial Statements and Additional Information
17
Other
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in the financial statements. Actual results could differ materially from
those estimated. The Fund applies investment company accounting
and reporting guidance.
3. SHARES
OF BENEFICIAL INTEREST
The following tables summarize share activity:
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
A Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
612,843
|
$18,952,021
|
238,594
|
$6,062,083
|
|
Shares
issued to shareholders in payment of distributions declared |
95,818
|
2,900,399
|
—
|
—
|
|
Shares
redeemed |
(484,438)
|
(15,002,072)
|
(640,003)
|
(16,240,817)
|
|
NET
CHANGE RESULTING FROM CLASS A SHARE TRANSACTIONS |
224,223
|
$6,850,348
|
(401,409)
|
$(10,178,734)
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
C Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
66,317
|
$1,584,094
|
54,843
|
$1,097,482
|
|
Shares
issued to shareholders in payment of distributions declared |
24,255
|
563,448
|
—
|
—
|
|
Shares
redeemed |
(121,496)
|
(2,914,075)
|
(373,265)
|
(7,301,670)
|
|
NET
CHANGE RESULTING FROM CLASS C SHARE TRANSACTIONS |
(30,924)
|
$(766,533)
|
(318,422)
|
$(6,204,188)
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Institutional
Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
6,188,149
|
$212,246,199
|
1,957,582
|
$52,342,763
|
|
Shares
issued to shareholders in payment of distributions declared |
298,556
|
9,804,591
|
—
|
—
|
|
Shares
redeemed |
(3,499,834)
|
(117,717,811)
|
(2,427,106)
|
(64,825,583)
|
|
NET
CHANGE RESULTING FROM INSTITUTIONAL SHARE TRANSACTIONS |
2,986,871
|
$104,332,979
|
(469,524)
|
$(12,482,820)
|
|
|
Year
Ended
7/31/2026
|
Year
Ended
7/31/2025
| ||
|
Class
R6 Shares: |
Shares
|
Amount
|
Shares
|
Amount
|
|
Shares
sold |
3,736,522
|
$127,563,057
|
2,042,285
|
$54,841,125
|
|
Shares
issued to shareholders in payment of distributions declared |
203,564
|
6,691,156
|
—
|
—
|
|
Shares
redeemed |
(1,761,063)
|
(59,345,366)
|
(2,442,136)
|
(65,026,671)
|
|
NET
CHANGE RESULTING FROM CLASS R6 SHARE TRANSACTIONS |
2,179,023
|
$74,908,847
|
(399,851)
|
$(10,185,546)
|
|
NET
CHANGE RESULTING FROM TOTAL FUND SHARE TRANSACTIONS |
5,359,193
|
$185,325,641
|
(1,589,206)
|
$(39,051,288)
|
4. FEDERAL
TAX INFORMATION
The tax character of distributions as reported
on the Statement of Changes in Net Assets for the years ended July 31, 2026 and 2025,
was as follows:
|
|
2026
|
2025
|
|
Ordinary
income1
|
$1,636,423
|
$—
|
|
Long-term
capital gains |
$21,040,766
|
$—
|
|
TOTAL
|
$22,677,189
|
$—
|
|
1
|
For
tax purposes, short-term capital gain distributions are considered ordinary income distributions. |
Annual
Financial Statements and Additional Information
18
As of July 31, 2026,
the components of distributable earnings on a tax-basis were as follows:
|
Undistributed
ordinary income1
|
$6,508,781
|
|
Net
unrealized appreciation |
$146,994,753
|
|
Undistributed
long-term capital gains |
$109,539,804
|
|
TOTAL
|
$263,043,338
|
|
1
|
For
tax purposes, short-term capital gains are considered ordinary income in determining distributable earnings. |
At July 31, 2026, the cost of investments
for federal tax purposes was $722,610,114. The net unrealized appreciation of investments for federal
tax purposes was $146,994,753. This consists of unrealized appreciation from investments for those securities having an excess of value
over cost of $182,123,166 and unrealized depreciation from investments for those securities having an excess of cost over value of $35,128,413.
The difference between book-basis and tax-basis net unrealized appreciation is attributable to differing treatments for the deferral
of losses on wash sales.
5. INVESTMENT
ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Adviser Fee
The
advisory agreement between the Fund and the Adviser provides for an annual fee equal to 0.80% of the Fund’s average daily net assets.
Subject to the terms described in the Expense Limitation note, the Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund for competitive reasons such as to maintain the Fund’s expense ratio, or as and
when appropriate, to maintain positive or zero net yields. For
the year ended July 31, 2026, the Adviser voluntarily waived $654,884 of its
fee and voluntarily reimbursed $364,177 of transfer agent fees.
The Adviser has agreed
to reimburse the Fund for certain investment adviser fees as a result of transactions in other affiliated investment
companies. For the year ended July 31, 2026, the Adviser reimbursed $30,760.
Administrative Fee
Federated
Administrative Services (FAS), under the Administrative Services Agreement, provides the Fund with administrative personnel and
services. For purposes of determining the appropriate rate breakpoint, “Investment Complex” is defined as all of the Federated
Hermes Funds subject to a fee under the Administrative Services
Agreement. The fee paid to FAS is based on the average daily net assets
of the Investment Complex as specified below:
|
Administrative
Fee |
Average
Daily Net Assets
of
the Investment Complex |
|
0.100%
|
on
assets up to $50 billion |
|
0.075%
|
on
assets over $50 billion |
Subject to the terms described in the Expense
Limitation note, FAS may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, the annualized fee paid to FAS was 0.078% of average daily net assets of the Fund.
In addition, FAS may charge certain out-of-pocket
expenses to the Fund.
Distribution Services Fee
The
Fund has adopted a Distribution Plan (the “Plan”) pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the Fund
will compensate Federated Securities Corp. (FSC), the principal
distributor, from the daily net assets of the Fund’s Class A Shares and Class C Shares
to finance activities intended to result in the sale of these shares. The Plan provides that the Fund may incur distribution expenses
at the following percentages of average daily net assets annually,
to compensate FSC:
|
|
Percentage
of Average Daily
Net
Assets of Class |
|
Class
A Shares |
0.05%
|
|
Class
C Shares |
0.75%
|
Subject to the terms described in the Expense
Limitation note, FSC may voluntarily choose to waive any portion of its fee. For the year ended
July 31, 2026, distribution services fees for the Fund were as follows:
|
|
Distribution
Services
Fees
Incurred |
|
Class
C Shares |
$81,828
|
For the year ended July 31, 2026, FSC retained
$8,526 of fees paid by the Fund.
When FSC receives fees,
it may pay some or all of them to financial intermediaries whose customers purchase shares. For the year ended
July 31, 2026, the Fund’s Class A Shares did not incur a distribution services fee; however, it may begin to incur this fee upon
approval of the Trustees.
Annual
Financial Statements and Additional Information
19
Sales Charges
Front-end
sales charges and contingent deferred sales charges (CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds prior to remittance, as applicable. For the year ended
July 31, 2026, FSC retained $3,620 in sales charges from the sale of Class A Shares. For the year ended July 31, 2026, FSC retained
$168 of CDSC relating to redemptions of Class C Shares.
Other Service Fees
For
the year ended July 31, 2026, FSSC received $16,370 of the other service fees disclosed in Note 2.
Expense Limitation
The
Adviser and certain of its affiliates (which may include FSC, FAS and FSSC) on their own initiative have agreed to waive certain amounts
of their respective fees and/or reimburse expenses. Total annual fund operating expenses (as shown in the financial highlights, excluding
interest expense, extraordinary expenses and proxy-related expenses, if any) paid by the Fund’s Class A Shares, Class C Shares,
Institutional Shares and Class R6 Shares (after the voluntary waivers and/or reimbursements) will not exceed 1.14%, 2.02%, 0.89% and
0.88% (the “Fee Limit”), respectively, up to but not including the later of (the “Termination Date”): (a) October
1, 2027; or (b) the date of the Fund’s next effective Prospectus.
Prior to October 1, 2025, the Fee Limit for the Class A Shares, Class C Shares, Institutional Shares
and Class R6 Shares was 1.13%, 2.01%, 0.88% and 0.87%, respectively. While the Adviser and its applicable affiliates currently do not
anticipate terminating or increasing these arrangements prior to the Termination Date, these arrangements may only be terminated or
the Fee Limit increased prior to the Termination Date with the approval of the Trustees.
Directors’/Trustees’ and Miscellaneous Fees
Certain
Officers and Trustees of the Fund are Officers and Directors or Trustees of certain of the above companies. To efficiently facilitate
payment, Independent Directors’/Trustees’ fees and
certain expenses related to conducting meetings of the Directors/Trustees and other
miscellaneous expenses are paid by an affiliate of the Adviser which in due course are reimbursed by the Fund. These expenses related
to conducting meetings of the Directors/Trustees and other miscellaneous expenses may be included in Accrued and Miscellaneous
Expenses on the Statement of Assets and Liabilities and Statement of Operations, respectively.
6. INVESTMENT
TRANSACTIONS
Purchases and sales of investments, excluding
long-term U.S. government securities and short-term obligations, for the year ended July
31, 2026, were as follows:
|
Purchases
|
$735,446,143
|
|
Sales
|
$581,177,815
|
7. CONCENTRATION
OF RISK
The Fund may invest a portion of its assets
in securities of companies that are deemed by the Fund’s management to be classified in similar
business sectors. Economic developments may have an effect on the liquidity and volatility of the portfolio securities.
A substantial portion
of the Fund’s portfolio may be comprised of entities in the Health Care sector. As a result, the Fund may be more
susceptible to any economic, business, political or other developments which generally affect these entities.
8. LINE
OF CREDIT
The Fund participates with certain other
Federated Hermes Funds, on a several basis, in an up to $400,000,000 unsecured, 364-day, committed,
revolving line of credit (LOC) agreement dated June 16, 2026. The LOC was made available to temporarily finance the repurchase
or redemption of shares of the Fund, failed trades, payment of dividends, settlement of trades and for other short-term, temporary
or emergency general business purposes. The Fund cannot borrow under the LOC if an inter-fund loan is outstanding. The Fund’s
ability to borrow under the LOC also is subject to the limitations of the Act and various conditions precedent that must be satisfied
before the Fund can borrow. Loans under the LOC are charged interest at a fluctuating rate per annum equal to (a) the highest, on
any day, of (i) the federal funds effective rate, (ii) the published secured overnight financing rate plus an assigned percentage, and
(iii) 0.0%, plus (b) a margin. Any fund eligible to borrow under
the LOC pays its pro rata share of a commitment fee based on the amount of
the lenders’ commitment that has not been utilized, quarterly in arrears and at maturity. As of July 31, 2026, the Fund had no outstanding
loans. During the year ended July 31, 2026, the Fund did not utilize the LOC.
9. INTERFUND
LENDING
Pursuant to an Exemptive Order issued by
the Securities and Exchange Commission, the Fund, along with other funds advised by subsidiaries
of Federated Hermes, Inc., may participate in an interfund lending program. This program provides an alternative credit facility
allowing the Fund to borrow from other participating affiliated funds. As of July 31, 2026, there were no outstanding loans. During
the year ended July 31, 2026, the program was not utilized.
10. OPERATING
SEGMENTS
An operating segment is defined as a component
of a public entity that engages in business activities from which it may recognize revenues
and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (CODM)
to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information
available. A management committee of the Adviser acts as the CODM. The Fund represents a single operating segment, as the
CODM monitors the operating results of the Fund as a whole and the strategic asset allocation is determined based on the
Annual
Financial Statements and Additional Information
20
investment objective
of the Fund and executed by the Fund’s portfolio management team. The financial information in the form of the Fund’s
portfolio composition, total returns, expense ratios and changes in net assets (i.e., changes in net assets resulting from operations,
subscriptions and redemptions) which is reviewed by the CODM to assess the Fund’s performance in comparison to the Fund’s
benchmarks and to make resource allocation decisions for the Fund’s single segment is consistent with the information presented
in these financial statements. Segment assets are reflected on
the accompanying Statement of Assets and Liabilities as “total assets” and significant
segment expenses are listed on the accompanying Statement of Operations.
11. INDEMNIFICATIONS
Under the Fund’s organizational documents,
its Officers and Directors/Trustees are indemnified against certain liabilities arising out of the
performance of their duties to the Fund (other than liabilities arising out of their willful misfeasance, bad faith, gross negligence
or reckless disregard of their duties to the Fund). In addition,
in the normal course of business, the Fund provides certain indemnifications under
arrangements with third parties. Typically, obligations to indemnify a third party arise in the context of an arrangement entered into
by the Fund under which the Fund agrees to indemnify such third party for certain liabilities arising out of actions taken pursuant to
the arrangement, provided the third party’s actions are
not deemed to have breached an agreed-upon standard of care (such as willful misfeasance,
bad faith, gross negligence or reckless disregard of their duties under the contract). The Fund’s maximum exposure under these
arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet arisen. The Fund
does not anticipate any material claims or losses pursuant to these arrangements at this time, and accordingly expects the risk of loss
to be remote.
12. FEDERAL
TAX INFORMATION (UNAUDITED)
For the fiscal year ended July 31, 2026,
54.2% of total ordinary income distributions (including short-term capital gains) made by the Fund
are qualifying dividends which may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Act
of 2003. Complete information is reported in conjunction with the reporting of your distributions on Form 1099-DIV.
Of the ordinary income
distributions (including short-term capital gains) made by the Fund during the year ended July 31, 2026, 54.3%
qualify for the dividend received deduction available to corporate shareholders.
For the year ended July
31, 2026, 3.6% of total ordinary income distributions (including short-term capital gains) qualified as business interest
income for purposes of 163(j) of the Code and the regulations thereunder.
For the year ended July 31, 2026, the amount
of long-term capital gains designated by the Fund was $21,040,766.
Annual
Financial Statements and Additional Information
21
Report of
Independent Registered Public Accounting Firm
TO THE SHAREHOLDERS AND THE
BOARD OF TRUSTEES OF FEDERATED HERMES MDT SMALL CAP GROWTH
FUND:
Opinion on the Financial Statements
We have audited the accompanying
statement of assets and liabilities of Federated Hermes MDT Small Cap Growth Fund (the
“Fund”) (one of the portfolios constituting Federated Hermes MDT Series (the “Trust”)), including the portfolio
of investments, as of July 31, 2026, and the related
statement of operations for the year then ended, the statement of changes in
net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period
then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the financial position of the Fund (one of the portfolios constituting Federated
Hermes MDT Series) at July 31, 2026, the results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and its financial highlights for each of the five years in the period then
ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are
the responsibility of the Trust’s management. Our responsibility is to express an opinion on the
Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Trust in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether
due to error or fraud. The Trust is not required to have, nor were we engaged to perform, an audit of the Trust’s internal
control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control
over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation
of securities owned as of July 31, 2026, by correspondence with the custodian, brokers, and others; when replies
were not received from brokers or others, we performed other auditing procedures. Our audits also included evaluating
the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation
of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor
of one or more Federated Hermes investment companies since 1979.
Boston, Massachusetts
September 23, 2026
September 23, 2026
Annual
Financial Statements and Additional Information
22
Evaluation
and Approval of Advisory Contract–May
2026
Federated Hermes MDT Small
Cap Growth Fund (the “Fund”)
At its meetings in May 2026 (the
“May Meetings”), the Fund’s Board of Trustees (the “Board”), including those Trustees who
are not “interested persons” of the Fund, as defined in the Investment Company Act of 1940, as amended (the
“Independent Trustees ”), reviewed and unanimously approved the continuation of the investment advisory contract between
the Fund and Federated MDTA LLC (the “Adviser”) (the “Contract”) for an additional one-year term. The Board’s
determination to approve the continuation of the Contract reflects the exercise of its business judgment after considering
such information deemed necessary to evaluate the terms of the Contract and to approve the continuation of the
existing arrangement. The information, factors and conclusions that formed the basis for the Board’s approval are summarized
below.
Information Received
and Review Process
At the request
of the Independent Trustees, the Fund’s Chief Compliance Officer (the “CCO”) furnished to the Board in advance
of its May Meetings an independent written report regarding data related to the Fund’s management fee (the
“CCO Management Fee Report”). The Board considered the CCO Management Fee Report, along with other information,
in evaluating the reasonableness of the Fund’s management fee and in determining to approve the continuation
of the Contract.
In addition
to the CCO Management Fee Report, the Board considered information specifically prepared in connection with
the approval of the continuation of the Contract that was presented at the May Meetings. In this regard, in the months preceding
the May Meetings, the Board requested and reviewed written responses and supporting materials prepared by the
Adviser and its affiliates (collectively, “Federated Hermes”) in response to requests posed to Federated Hermes by independent
legal counsel on behalf of the Independent Trustees encompassing a wide variety of topics, including those summarized
below. The Board also considered such additional matters as the Independent Trustees deemed reasonably necessary
to evaluate the Contract, which included detailed information about the Fund and Federated Hermes furnished to the
Board at its meetings throughout the year.
The Board’s
consideration of the Contract included review of materials and information covering the following matters, among
others: (1) a copy of the Contract; (2) the nature, quality and extent of the advisory and other services provided to the
Fund by Federated Hermes; (3) Federated Hermes’ business and operations; (4) the Adviser’s investment philosophy, personnel
and processes; (5) the Fund’s investment objective and strategies; (6) the Fund’s short-term and long-term performance
- in absolute terms (both on a gross basis and net of expenses) and relative to an appropriate group of peer funds
and its benchmark; (7) the Fund’s fees and expenses, including the advisory fee and the overall expense structure of the
Fund - in absolute terms and relative to an appropriate group of peer funds, with due regard for contractual or voluntary
expense limitations (if any); (8) the financial condition of Federated Hermes; (9) the Adviser’s profitability with respect
to managing the Fund; (10) distribution and sales activity for the Fund; and (11) the use and allocation of brokerage
commissions derived from trading the Fund’s portfolio securities (if any).
The Board
also considered judicial decisions concerning allegedly excessive investment advisory fees charged to other registered
funds in evaluating the Contract. Using these judicial decisions as a guide, the Board considered several factors it
deemed relevant to an adviser’s fiduciary duty with respect to its receipt of compensation from a fund, including: (1) the nature
and quality of the services provided by the adviser to the fund and its shareholders, including the performance of the
fund, its benchmark and comparable funds; (2) the adviser’s cost of providing the services and the profitability to the adviser
of providing advisory services to the fund; (3) the extent to which the adviser may realize “economies of scale” as the
fund grows larger and, if such economies of scale exist, whether they have been appropriately shared with the fund and its
shareholders or the family of funds; (4) any “fall-out” benefits that accrue to the adviser because of its relationship with
the fund, including research services received from
brokers that execute fund trades and any fees paid to affiliates of the adviser
for services rendered to the fund; (5) comparative fees and expenses, including a comparison of management fees paid
to the adviser with those paid by similar funds managed by the same adviser or other advisers as well as management fees
charged to institutional and other advisory clients of the same adviser for what might be viewed as like services; and (6)
the extent of care, conscientiousness and independence with which the fund’s board members perform their duties and their
expertise, including whether they are fully informed about all facts the board deems relevant to its consideration of the
adviser’s services and fees. The Board considered that the Securities and Exchange Commission (“SEC”) disclosure requirements
regarding the basis for a fund board’s approval of the fund’s investment advisory contract generally align with
the factors listed above. The Board was guided by these factors in its evaluation of the Contract to the extent it considered
them to be appropriate and relevant, as discussed further below. The Board considered and weighed these factors
in light of its substantial accumulated experience in governing the Fund and working with Federated Hermes on matters
relating to the oversight of the other funds advised by Federated Hermes (each, a “Federated Hermes Fund” and, collectively,
the “Federated Hermes Funds”).
Annual
Financial Statements and Additional Information
23
In
addition, the Board considered the preferences and expectations of Fund shareholders and the potential disruptions of the
Fund’s operations and various risks, uncertainties and other effects that could occur as a result of a decision to terminate
or not renew the Contract. In particular, the Board recognized that many shareholders likely have invested in the Fund
based on the strength of Federated Hermes’ industry standing and reputation and with the expectation that Federated Hermes
will have a continuing role in providing advisory services to the Fund. Thus, the Board observed that there are a range
of investment options available to the Fund’s shareholders in the marketplace, and such shareholders, having had the opportunity
to consider other investment options, have effectively selected Federated Hermes by virtue of investing in the
Fund.
In determining
to approve the continuation of the Contract, the members of the Board reviewed and evaluated information
and factors they believed to be relevant and appropriate through the exercise of their reasonable business judgment.
While individual members of the Board may have weighed certain factors differently, the Board’s determination
to approve the continuation of the Contract was based on a comprehensive consideration of all information provided
to the Board throughout the year. The Board recognized that its evaluation process is evolutionary and that the factors
considered and the emphasis placed on relevant factors may change in recognition of changing circumstances in the
registered fund marketplace. The Independent Trustees were assisted throughout the evaluation process by independent legal
counsel. In connection with their deliberations at the May Meetings, the Independent Trustees met separately in executive
session with their independent legal counsel and without management present to review the relevant materials and
consider their responsibilities under applicable laws. In addition, senior management representatives of Federated Hermes
also met with the Independent Trustees and their independent legal counsel to discuss the materials and presentations
furnished to the Board at the May Meetings. The Board considered the approval of the Contract for the Fund as
part of its consideration of agreements for funds across the family of Federated Hermes Funds, but its approvals were made
on a fund-by-fund basis.
Nature, Extent and
Quality of Services
The Board
considered the nature, extent and quality of the services provided to the Fund by the Adviser and the resources
of Federated Hermes dedicated to the Fund. In this regard, the Board evaluated, among other things, the terms of the
Contract and the full range of services provided to the Fund by Federated Hermes. The Board considered the Adviser’s personnel,
investment philosophy and process, investment research capabilities and resources, trade operations capabilities,
experience and performance track record. The Board reviewed the qualifications, backgrounds and responsibilities
of the portfolio management team primarily responsible for the day-to-day management of the Fund and evaluated
Federated Hermes’ ability and experience in attracting and retaining qualified personnel to service the Fund. The Board
considered the trading operations by the Adviser, including the execution of portfolio transactions and the selection of
brokers for those transactions. The Board also considered the Adviser’s ability to deliver competitive investment performance
for the Fund when compared to the Fund’s Performance Peer Group (as defined below).
In addition,
the Board considered the financial resources and overall reputation of Federated Hermes and its willingness to
consider and make investments in personnel, infrastructure, technology, cybersecurity, business continuity planning and operational
enhancements that are designed to benefit the Federated Hermes Funds. The Board considered Federated Hermes’
oversight of the securities lending program for the Federated Hermes Funds that engage in securities lending and noted
the income earned by the Federated Hermes Funds that participate in such program. In addition, the Board considered
the quality of Federated Hermes’ communications with the Board and responsiveness to Board inquiries and requests
made from time to time with respect to the Federated Hermes Funds. The Board also considered that Federated Hermes
is responsible for providing the Federated Hermes Funds’ officers.
The Board
received and evaluated information regarding Federated Hermes’ regulatory and compliance environment. The
Board considered Federated Hermes’ compliance program and compliance history and reports from the CCO about Federated
Hermes’ compliance with applicable laws and regulations, including responses to regulatory developments and any
compliance or other issues raised by regulatory agencies. The Board also noted Federated Hermes’ support of the Federated
Hermes Funds’ compliance control structure and the compliance-related resources devoted by Federated Hermes
in support of the Fund’s obligations pursuant to Rule 38a-1 under the Investment Company Act of 1940, as amended,
including Federated Hermes’ commitment to respond to rulemaking and other regulatory initiatives of the SEC. The
Board considered Federated Hermes’ approach to internal audits and risk management with respect to the Federated Hermes
Funds and its day-to-day oversight of the Federated Hermes Funds’ compliance with their investment objectives and
policies as well as with applicable laws and regulations, noting that regulatory and other developments had over time led,
and continue to lead, to an increase in the scope of Federated Hermes’ oversight in this regard. In addition, the Board noted
Federated Hermes’ commitment to maintaining high quality systems and expending substantial resources to prepare for
and respond to ongoing changes due to the market, regulatory and control environments in which the Fund and its service
providers operate.
Annual
Financial Statements and Additional Information
24
The
Board considered Federated Hermes’ efforts to provide shareholders in the Federated Hermes Funds with a comprehensive
array of funds with different investment objectives, policies and strategies. The Board considered the expenses
that Federated Hermes had incurred, as well as the entrepreneurial and other risks assumed by Federated Hermes, in
sponsoring and providing on-going services to new funds to expand these opportunities for shareholders. The Board noted
the benefits to shareholders of being part of the family of Federated Hermes Funds, which include the general right to
exchange investments between the same class of shares without the incurrence of additional sales charges.
Based on
these considerations, the Board concluded that it was satisfied with the nature, extent and quality of the services
provided by the Adviser to the Fund.
Fund Investment Performance
The Board
considered the investment performance of the Fund. In evaluating the Fund’s investment performance, the Board
considered performance results in light of the Fund’s investment objective, strategies and risks. The Board considered
detailed investment reports on, and the Adviser’s analysis of, the Fund’s performance over different time periods
that were provided to the Board throughout the year and in connection with the May Meetings. These reports included,
among other items, information on the Fund’s gross and net returns, the Fund’s investment performance compared
to one or more relevant categories or groups of peer funds and the Fund’s benchmark, performance attribution information
and commentary on the effect of market conditions. The Board noted that it evaluated investment performance at
meetings throughout the year and received reports from Federated Hermes regarding the performance of certain Federated
Hermes Funds as well as Federated Hermes’ explanations for less favorable performance and any specific actions
Federated Hermes had taken, or had determined to take, to seek to enhance Fund investment performance and the results
of those actions.
The Board
also reviewed comparative information regarding the performance of other registered funds in the category of
peer funds selected by Morningstar, Inc. (“Morningstar”), an independent fund ranking organization (the “Performance
Peer Group”). The Board noted the CCO’s
statement that comparisons to fund peer groups may be helpful, though not conclusive,
in evaluating the performance of the Adviser in managing the Fund. The Board also considered a report comparing
the performance of the Fund solely to other funds with a quantitative focus in the Performance Peer Group.
The Board
also considered comparative performance data from Lipper, Inc. that was included in reports provided to the Board
throughout the year.
The Board
considered that for the one-year, three-year and five-year periods ended December 31, 2025, the Fund’s performance
was above the median of the Performance Peer Group. In addition, the Board was informed by the Adviser that,
for the same periods, the Fund outperformed its benchmark for the one-year, three-year and five-year periods.
Based on
these considerations, the Board concluded that it had continued confidence in the Adviser’s overall capabilities
to manage the Fund.
Fund Expenses
The Board
considered the advisory fee and overall expense structure of the Fund and the comparative fee and expense information
that had been provided in connection with the May Meetings. In this regard, the Board was presented with, and
considered, information regarding the contractual advisory fee rates, net advisory fee rates, total expense ratios and each
element of the Fund’s total expense ratio (i.e., gross and net advisory fees, administrative fees, custody fees, portfolio accounting
fees and transfer agency fees) relative to an appropriate group of peer funds compiled by Federated Hermes from
the overall category of peer funds selected by Morningstar (the “Expense Peer Group”). The Board received a description
of the methodology used to select the Expense Peer Group from the overall Morningstar category. The Board also
reviewed comparative information regarding the fees and expenses of the broader group of funds in the overall Morningstar
category.
While mindful
that courts have cautioned against giving too much weight to comparative information concerning fees charged
to funds by other advisers, the use of comparisons between the Fund and its Expense Peer Group assisted the Board
in its evaluation of the Fund’s fees and expenses. The Board focused on comparisons with other registered funds more
heavily than non-registered fund products or services because such comparisons are believed to be more relevant. The
Board considered that other registered funds are the products most like the Fund, in that they are readily available to Fund
shareholders as alternative investment vehicles, and they are the type of investment vehicle, in fact, chosen and maintained
by the Fund’s shareholders. The Board noted that the range of such other registered funds’ fees and expenses, therefore,
appears to be a relevant indicator of what investors have found to be reasonable in the marketplace in which the Fund
competes.
The Board
reviewed the contractual advisory fee rate, net advisory fee rate and other expenses of the Fund and noted the position
of the Fund’s fee rates relative to its Expense Peer Group. In this regard, the Board noted that the contractual advisory
fee rate was at the median of the Expense Peer Group, and the Board was satisfied that the overall expense structure
of the Fund remained competitive.
Annual
Financial Statements and Additional Information
25
The
Board also received and considered information about the nature and extent of services offered and fees charged by Federated
Hermes to other types of clients with investment strategies similar to those of the Federated Hermes Funds, including
non-registered fund clients (such as institutional separate accounts) and third-party unaffiliated registered funds for
which the Adviser or its affiliates serve as sub-adviser. The Board noted the CCO’s statement that non-registered fund clients
are inherently different products due to the following differences, among others: (i) types of targeted investors; (ii)
applicable laws and regulations; (iii) legal structures; (iv) average account sizes; (v) portfolio management techniques made
necessary by different cash flows and different associated costs; (vi) the time spent by portfolio managers and their teams
(among other personnel across various departments, including legal, compliance and risk management) in reviewing securities
pricing; (vii) SEC mandated risk management programs with respect to fund liquidity and use of derivatives; (viii)
questions on regulatory reporting; (ix) a variety of different administrative responsibilities; and (x) degrees of risk associated
with management. The Board also considered information regarding the differences in the nature of the services required
for Federated Hermes to manage its proprietary registered fund business versus managing a discrete pool of assets as
a sub-adviser to another institution’s registered fund, noting the CCO’s statement that Federated Hermes generally performs
significant additional services and assumes substantially greater risks in managing the Fund and other Federated Hermes
Funds than in its role as sub-adviser to an unaffiliated third-party registered fund. The Board noted that the CCO emphasized
that differences in fees for providing advisory services to other types of clients may not be appropriate when judging
the appropriateness of the Federated Hermes Funds’ advisory fees because of the different services provided.
Based on
these considerations, the Board concluded that the fees and total operating expenses of the Fund, in conjunction
with other matters considered, are reasonable in light of the services provided.
Profitability
The Board
received and considered profitability information furnished by Federated Hermes. Such profitability information
included revenues reported on a fund-by-fund basis and estimates of the allocation of expenses made on a fund-by-fund
basis, using allocation methodologies specified by the CCO and described to the Board. The Board considered
the CCO’s statement that, while the cost allocation report applies consistent allocation processes for purposes of
general comparison of funds, the inherent difficulties in arbitrarily allocating costs lack precision and may cause the report
to be unreliable because a single change in an allocation estimate can dramatically alter the resulting estimate of cost
and/or profitability of a Federated Hermes Fund and may produce unintended consequences. In addition, the Board considered
the CCO’s statement that the allocation methodologies used by Federated Hermes in estimating profitability for purposes
of reporting to the Board in connection with the continuation of the Contract are consistent with the methodologies
previously reviewed by an independent consultant. The Board noted that the independent consultant had previously
conducted a review of the allocation methodologies and reported to the Board that, although there is no single best
method to allocate expenses, the methodologies used by Federated Hermes are reasonable. The Board considered the CCO’s
statement that the estimated profitability to the Adviser from its relationship with the Fund was not unreasonable in relation
to the services provided.
The Board
also reviewed information compiled by Federated Hermes comparing its profitability information to other publicly-held
fund management companies, including information regarding profitability trends over time. The Board recognized
that profitability comparisons among fund management companies are difficult because of the variation in the type
of comparative information that is publicly available, and the profitability of any fund management company is affected
by numerous factors. The Board considered the CCO’s statement that, based on such profitability information, Federated
Hermes’ profit margins did not appear to be excessive and that Federated Hermes appeared financially sound, with
the resources available to fulfill its contractual obligations.
Economies of Scale
The Board
received and considered information about the notion of possible realization of “economies of scale” as a fund
grows larger, the difficulties of isolating and quantifying economies of scale at an individual fund level, and the extent
to which potential scale benefits are shared with shareholders. In this regard, the Board considered that Federated Hermes
has made significant and long-term investments in areas that support all of the Federated Hermes Funds, such as: portfolio
management, investment research and trading operations; shareholder services; compliance; business continuity, cybersecurity
and information security programs; internal audit and risk management functions; and technology, systems capabilities
and use of data. The Board noted that Federated Hermes’ investments in these areas are extensive and are designed
to provide enhanced or expanded services to the Federated Hermes Funds and their shareholders. The Board considered
that the benefits of these investments are likely to be shared with the family of Federated Hermes Funds as a whole.
In addition, the Board considered that fee waivers and expense reimbursements are another means for potential economies
of scale to be shared with shareholders and can provide protection from an increase in expenses if a Federated Hermes
Fund’s assets decline. The Board considered that, in order for the Federated Hermes Funds to remain competitive
Annual
Financial Statements and Additional Information
26
in the marketplace,
Federated Hermes has frequently waived fees and/or reimbursed expenses for the Federated Hermes Funds
and has disclosed to shareholders and/or reported to the Board its intention to do so (or continue to do so) in the future.
The Board also considered that Federated Hermes has been active in managing expenses of the Federated Hermes Funds
in recent years, which has resulted in benefits being realized by shareholders.
The Board
also received and considered information on adviser-paid fees (commonly referred to as “revenue sharing” payments)
that was provided to the Board throughout the year and in connection with the May Meetings. The Board considered
that Federated Hermes believes that this information is relevant to consider whether Federated Hermes had an incentive
to either not apply breakpoints, or to apply breakpoints at higher levels, but should not be considered when evaluating
the reasonableness of advisory fees. The Board also noted the absence of any applicable regulatory or industry guidelines
on economies of scale, which is compounded by the lack of any uniform methodology or pattern with respect to structuring
fund advisory fees with breakpoints that serve to reduce the fees as a fund attains a certain size.
Other Benefits
The Board
considered information regarding the compensation and other ancillary (or “fall-out”) benefits that Federated Hermes
derived from its relationships with the Federated Hermes Funds. The Board considered that Federated Hermes may
derive a benefit to its reputation as an adviser to the Fund, which may help in attracting other clients and investment personnel.
The Board noted that, in addition to receiving advisory fees under the Federated Hermes Funds’ investment advisory
contracts, Federated Hermes’ affiliates also receive fees for providing other services to the Federated Hermes Funds
under separate service contracts, including for serving as the Federated Hermes Funds’ administrator and distributor.
In this regard, the Board considered that Federated Hermes’ affiliates provide distribution and shareholder services
to the Federated Hermes Funds, for which they may be compensated through distribution and servicing fees paid pursuant
to Rule 12b-1 plans or otherwise. The Board also received and considered information detailing the benefits, if any,
that Federated Hermes may derive from its receipt of research services from brokers who execute portfolio trades for the
Federated Hermes Funds.
Conclusions
The Board
considered the CCO’s presentation and statements and the information accompanying the CCO Management Fee
Report. The Board recognized that its evaluation of the Federated Hermes Funds’ advisory and sub-advisory arrangements
is a continuing and ongoing process that is informed by the information that the Board requests and receives from
management throughout the course of the year.
On the basis
of the information and factors summarized above, among other information and factors deemed relevant by the
Board, and the evaluation thereof, the Board, including the Independent Trustees, unanimously voted to approve the continuation
of the Contract. The Board based its determination to approve the Contract on the totality of the circumstances
and relevant factors and with a view of past and future long-term considerations. Not all of the factors and considerations
identified above were necessarily deemed to be relevant to the Fund, nor did the Board consider any one of them
to be determinative.
Annual
Financial Statements and Additional Information
27
Mutual funds are not
bank deposits or obligations, are not guaranteed by any bank and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency.
Investment in mutual funds involves investment risk, including the possible loss of principal.
This information is authorized
for distribution to prospective investors only when preceded or accompanied by the Fund’s Prospectus,
which contains facts concerning its objective and policies, management fees, expenses and other information.
Federated Hermes MDT Small Cap Growth Fund
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Federated Hermes Funds
4000 Ericsson Drive
Warrendale, PA 15086-7561
Contact us at
FederatedHermes.com/us
or call 1-800-341-7400.
or call 1-800-341-7400.
Federated Securities Corp., Distributor
CUSIP 31421R775
CUSIP 31421R767
CUSIP 31421R759
CUSIP 31421R619
CUSIP 31421R767
CUSIP 31421R759
CUSIP 31421R619
37313 (9/26)
©
2026 Federated Hermes, Inc.
| Item 8. | Changes in and Disagreements with Accountants for Open-End Management Investment Companies |
Federated Hermes MDT All Cap Core Fund: Not Applicable.
Federated Hermes MDT Balanced Fund: Not Applicable.
Federated Hermes MDT Large Cap Growth Fund: Not Applicable.
Federated Hermes MDT Small Cap Core Fund: Not Applicable.
Federated Hermes MDT Small Cap Growth Fund: Not Applicable.
| Item 9. | Proxy Disclosures for Open-End Management Investment Companies. |
Federated Hermes MDT All Cap Core Fund: Not Applicable.
Federated Hermes MDT Balanced Fund: Not Applicable.
Federated Hermes MDT Large Cap Growth Fund: Not Applicable.
Federated Hermes MDT Small Cap Core Fund: Not Applicable.
Federated Hermes MDT Small Cap Growth Fund: Not Applicable.
| Item 10. | Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies. |
Federated Hermes MDT All Cap Core Fund: The Fund’s disclosure of remuneration items is included as part of the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Balanced Fund: The Fund’s disclosure of remuneration items is included as part of the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Large Cap Growth Fund: The Fund’s disclosure of remuneration items is included as part of the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Small Cap Core Fund: The Fund’s disclosure of remuneration items is included as part of the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Small Cap Growth Fund: The Fund’s disclosure of remuneration items is included as part of the Financial Statements filed under Item 7 of this form.
| Item 11. | Statement Regarding Basis for Approval of Investment Advisory Contract. |
Federated Hermes MDT All Cap Core Fund: The Fund’s Evaluation and Approval of Advisory Contract summary by fund appear in the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Balanced Fund: The Fund’s Evaluation and Approval of Advisory Contract summary by fund appear in the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Large Cap Growth Fund: The Fund’s Evaluation and Approval of Advisory Contract summary by fund appear in the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Small Cap Core Fund: The Fund’s Evaluation and Approval of Advisory Contract summary by fund appear in the Financial Statements filed under Item 7 of this form.
Federated Hermes MDT Small Cap Growth Fund: The Fund’s Evaluation and Approval of Advisory Contract summary by fund appear in the Financial Statements filed under Item 7 of this form.
| Item 12. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies |
Not Applicable
| Item 13. | Portfolio Managers of Closed-End Management Investment Companies. |
Not Applicable
| Item 14. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not Applicable
| Item 15. | Submission of Matters to a Vote of Security Holders. |
No Changes to Report
| Item 16. | Controls and Procedures. |
(a) The registrant’s Principal Executive Officer and Principal Financial Officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Act) are effective in design and operation and are sufficient to form the basis of the certifications required by Rule 30a-(2) under the Act, based on their evaluation of these disclosure controls and procedures as of a date within 90 days of the filing date of this report on Form N-CSR.
(b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.
| Item 17. | Disclosure of Securities Lending Activities for Closed-End Management Investment Companies. |
Not Applicable
| Item 18. | Recovery of Erroneously Awarded Compensation |
(a) Not Applicable
(b) Not Applicable
| Item 19. | Exhibits |
(a)(1) Not Applicable.
(a)(2) Not Applicable.
(a)(3) Certifications of Principal Executive Officer and Principal Financial Officer.
(a)(4) Not Applicable.
(a)(5) Not Applicable.
(b) Certifications pursuant to 18 U.S.C. Section 1350.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: Federated Hermes MDT Series
By: /s/ Jeremy D. Boughton
Jeremy D. Boughton, Principal Financial Officer
Date: September 23, 2026
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ J. Christopher
Donahue
J. Christopher Donahue, Principal Executive Officer
Date: September 23, 2026
By: /s/ Jeremy D. Boughton
Jeremy D. Boughton, Principal Financial Officer
Date: September 23, 2026